UC-NRLF 


B   4   S?l 


aoa 


Sfi 


,'m 


■ 

K 


w  • 


fill 


UNIVERSITY  OF  CALIFORNIA. 

Received  JAN   12    ]m.  i89 

^Accessions  No.  Llc[cflci    ■  Class  No, 


CONVERSATIONS 


THE  PRINCIPAL  SUBJECTS 
i 

OF 

Political  Economy. 


BY 

WILLIAM  ELDER, 

AUTHOR  OF  "QUESTIONS  OF  THE  DAT,  ECONOMIC  AND  SOCIAL. 


'Skf*  OF  THE        < 

[UHIVBRSIT" 

PhFlAdIeLPHIA: 

HENRY    CAREY    BAIRD    &    CO., 

Industrial  Publishers,  Booksellers,  and  Importers, 

810  Walnut  Street. 

1882. 


^ 


111 


Copyright: 
WILLIAM   ELDER. 

1882. 


COLLINS,  PRINTER. 


$edtat*fl 

WOULD  IT  WERE  WORTHIER — 

&o  ilje  $fItmorg 

OF 

ALEXANDER  HAMILTON, 

HENRY  C.  CAREY, 

STEPHEN    COLWELL: 

THE   POLITICAL   ECONOMISTS 

OF 

THE   NEW   WORLD 

FOR 

THE  NEW  TIME. 


PREFACE. 


Tins  book  is  not  intended  for  occasional  reference,  and  I  have 
equipped  it  with  an  index  raisonne',  and  not  with  a  verbal  index. 
The  matters  treated  in  it  would  afford  a  very  much  longer  list  of 
items,  but  I  would  have  the  reader  to  be  a  student  of  the  matters 
presented  and  discussed.  A  distinguished  jurist  of  Pennsylvania, 
when  he  was  a  student,  it  is  said,  tore  the  indexes  out  of  his  copy 
of  the  Supreme  Court  Reports,  and  it  is  believed  that  he  was  all 
the  better  acquainted  with  the  contents  of  the  books.  He  in- 
tended to  be  a  lawyer,  not  a  case  lawyer.  He  took  notice,  not 
notes,  charging  his  judgment  and  memory,  instead  of  a  note-book, 
with  the  matter  of  his  studies. 

A  complete  index  to  the  topics  herein  treated  would  fill  forty  or 
■fifty  pages,  although  the  text  covers  but  three  hundred. 

I  think  that  the  work  itself  will  not  be  hard  to  read  or  under- 
stand. 


Washington,  April  15,  1S82. 


(v) 


CONTENTS. 


PAGE 

CHAPTER  I. 
Political  Economy      ....  9 

CHAPTER  II. 

\\  EALTH ±0 

CHAPTER  III. 
The  Growth  of  Wealth — Its  Agencies 23 

CHAPTER  IV. 

Man  and  Land — Occupation  of  the  Earth 27 

CHAPTER  V. 

The  Law  of  Migration  and  Occupation  of  the  Earth  by  the  Human- 
Race         31 

CHAPTER  VI. 

Rent 49 

CHAPTER  VII. 

Commerce  and  Trade— Sources  of  Wealth 64 

Domestic  Commerce,  as  a  Source  of  Wealth   .        .        ..       •        .66 
Improvement  in  Travel  and  Transportation,  a  Source  of  Growing- 
Wealth       ™ 


CHAPTER  VIII. 


Substitution '- 

First,  from  the  Animal  to  the  Vegetable  Kingdom       ...  77 
Second,  from  the  Animal  and  Vegetable  to  the  Mineral  Kingdom  77 
Third,  from  Animals,  Vegetables,  and  Minerals,  to  the  Imponder- 
ables   78 

From  Inferior  to  Better  of  the  same  kind 78 

CHAPTER  IX. 
Population SO 

CHAPTER  X. 

Wages.  Profits,  and  Interest    ........       93 

(vii) 


Money 


Functions  of  Money    . 


CONTENTS. 


CHAPTER  XI. 


CHAPTER  XII. 


115 


.     121 


CHAPTER  XIII. 
Money  and  Prices 124 


CHAPTER  XIV. 
Standards — Gold  or  Silyer,  or  both 

CHAPTER  XV. 

Money,  a  Producer  of  Values  . 

CHAPTER  XVI. 
Money  of  Account     ..... 


134 


146 


.     149 


CHAPTER  XVII. 
Credit  Money 153 


CHAPTER  XVIII 
Banking 

Banks  of  Issue 
Bank  of  Genoa 
Bank  of  Amsterdam 
Bank  of  Hamburg 
Bank  of  England  . 
American  Bank  Experiences 
Our  National  Banking  System 
Bank  of  France 


CHAPTER  XIX. 


International  Trade 


Close  of  the  Debate    . 


1G3 

171 
179 
186 
192 
194 
208 
212 
221 


242 


CHAPTER  XX. 


298 


APPENDIX  A. 

Proportion  of  Bank  Checks,  Bank  Notes.  Bills,  Drafts,  and 
Coin,  respectively  in  the  Banking  Business  of  England  and 
the  United  States 30] 


INDEX  RAISONNE 


305 


..;  :  - 

CONVERSATIONS 


PRINCIPAL  SUBJECTS  OF  POLITICAL  ECONOMY. 


T.   Teacher, 

P.   Pupil,  )■  Dramatis  Persons. 

D.  Disputant, 


CHAPTER  I. 
POLITICAL  ECONOMY. 

P.  What  is  Political  Economy? 

T.  The  answer  to  that  question,  which  happens  to  be  a  dozen 
questions  in  one,  should  be  made  in  the  drift  of  thought  of  the 
questioner.  Let  me  try  whether  I  can  find  your  aim ;  first,  nega- 
tively: It  is  not  Theology,  though  it  is  concerned  with  the  provi- 
dential government  which  overrules  the  earthly  fortunes  of  men. 
It  is  not  Jurisprudence,  though  it  does  in  its  inquiries  involve  pro- 
visions for  the  peace  and  good  order  of  society.  It  is  not  Politics, 
or  the  science  of  civil  legislation,  though  it  must  be  considered 
and  have  place  in  political  constitutions  and  in  their  administra- 
tion. 

Affirmatively:  Political  Economy  is  primarily  occupied  with 
the  laws,  natural  and  social,  which  govern  in  the  production  and 
distribution  of  wealth  in  material  things,  with  a  constant  outlook 
to  the  general  welfare  of  society,  so  far  as  that  welfare  depends 
upon  the  necessaries,  comforts,  and  luxuries  of  physical  life. 

J\  You  said  that  my  question  is  in  fact  a  dozen  questions  in 
one.     How  can  that  be  ': 

T.  There  are  so  many  disputes  among  the  authorities  about 
the  range  of  the  system,  its  proper  subjects,  the  kind  of  data  and 


10  POLITICAL  ECONOMY. 

of  reasoning  on  which  it  should  be  based,  or  which  it  legitimately 
employs,  that  you  would  be  in  danger  of  getting  a  dozen  different 
answers,  and  might,  in  the  confusion  of  definitions,  fail  to  clearly 
understand  any  one  of  them.  One  party,  following  J.  Stuart 
Mill,  holds  that  Political  Economy  is  a  deductive  science,  drawn 
from  assumptions,  or  first  principles  ;  another,  after  the  school  of 
Ricardo,  that  it  is  an  inductive  science,  built  upon  elementary 
facts  ;  another,  among  whom  are  August  Comte,  Stephen  Col- 
well.  Daniel  Webster,  and  Napoleon  Bonaparte,  denies  its  preten- 
sion to  be  a  science  in  any  proper  sense  of  the  word,  holding  that 
at  least  it  is  only  a  s}Tstem  or  assemblage  of  truths,  which  have 
no  central  or  overruling  law  or  principle.  And  when  you  come 
to  hear  them  in  the  definition  of  the  terms  of  art  which  they  all 
alike  use,  you  find  them  equivocal,  contradictory,  and  uncertain 
in  the  inferences  deduced  from  them. 

D.  I  thought  that  the  principles  of  the  science  were  so  far 
certain  and  settled  as  to  be  sure  directories  in  study,  and  even  in 
legislative  policy.  Did  not  Adam  Smith,  the  father  of  the  science, 
give  it  exactitude  and  completeness?  Did  not  J.  B.  Say  give  i; 
a  symmetrical  exposition  and  happy  elucidation  ?  Does  not  John 
Stuart  Mill  follow  in  substantial  accordance  with  the  text  of  the 
great  leader  ?  And  can  it  be  possible  that  the  generally  prevalent 
faith  is  without  any  sort  of  Scripture  authority  ? 

T.  All  these  authorities,  and  all  other  of  the  principal  followers 
of  Smith,  agree  that  he  did  not  attempt  or  intend  the  revelation 
of  a  Koran  of  economic  faith.  J.  B.  Say,  the  interpreter  of  The 
Wealth  of  Nations^  who  gave  it  the  shape  in  which  it  has  been 
used,  says  of  it:  "The  work  can  only  be  considered  as  an  im- 
methodical  assemblage  of  the  soundest  principles  of  political 
economy  ;  an  irregular  mass  of  curious  and  original  speculations, 
and  of  known  demonstrated  truths.'"  J.  R.  McCulloch,  who  wrote 
a  commentary  upon  the  work  as  close  as  that  usually  given  to  the 
Bible,  contradicts  his  author  in  at  least  a  hundred  particulars. 
J.  S.  Mill  says,  "  The  work  is  in  many  parts  obsolete,  and  in  all 
imperfect."  In  fact,  a  sufficient  acquaintance  with  the  history  of 
Smith's  school  shows  that  his  followers  have  completely  overlaid 
him,  and  left  nothing  of  him  but  a  name  to  live.  Moreover,  they 
ha\c  agreed  upon  no  substitute  or  amended  system.     Daniel  Web- 


POLITICAL  ECONOM  V .  11 

ster*  said  of  Smith  and  his  followers,  "  If  I  were  to  pick  out  with 
one  hand  all  the  mere  truisms,  and  with  the  other  all  the  doubtful 
propositions,  little  would  be  left."  And  Napoleon  Bonaparte,  who 
forbade  the  publication  of  J.  B.  Say's  exposition  of  the  Smith 
system,  shortly  declared  that  "  if  an  empire  were  made  of  ada- 
mant, the  political  economists  would  grind  it  to  powder." 

Now,  while  I  would  free  you  from  looking  to  the  authorities  of 
our  college  text-books,  and  relieve  you  from  mustering  in  squads 
of  partisans,  I  do  not  intend  to  foster  the  conceit  of  free  and  inde- 
pendent thought  while  I  invite  it  to  do  its  own  work,  because  I 
think  that  it  is  not  all  which  a  man  swallows  that  makes  him  fat, 
but  only  that  which  he  assimilates  and  incorporates,  and  makes 
his  own.  Tacit  assent  is  not  confirmation,  and  one's  knowledge  is 
just  what  he  himself  knows. 

D.  Those' opinions  of  yours  seem  to  me  to  dispose  of  the  study 
of  political  economy  at  the  outset  of  the  race,  and  spares  its  doc- 
trinal run. 

T.  You  are  right,  if  the  whole  question  in  our  proposed  inquiry 
were  which  of  the  contestants  is  entitled  to  the  stakes  in  the  issue 
of  a  strife  of  speculation  ;  but,  please  to  understand  me,  that  while 
political  economy  is  not  and  cannot  be  a  science,  as  astronomy, 
chemistry,  anatomy,  and  music  ;  and  yet  it  may  be,  or  in  the  end 
may  become,  a  system,  explanatory  and  directory  in  the  conduct 
of  societary  and  business  affairs  ;  and  as  such  is  as  worthy  of  study 
as  any  of  the  abstract,  the  universal,  and  the  invariable,  which  is 
justly  entitled  to  the  distinctive  name  of  science.  Is  not  remedial 
medicine  as  worthy  of  study  ;  and  are  not  its  discoveries  and  in- 
struction as  important  to  health  as  if  the  frame  and  constitution  of 
man  were  a  piece  of  clockwork,  and  as  obedient  in  all  its  move- 
ments and  aberrations  to  mathematical  rules  ?  Consider,  sir,  the 
business  of  political  economy  is  to  deal  with,  redress,  and  direct 
the  condition  and  conduct  of  communities,  in  conformity  with  the 
forces  which  rule  their  affairs  ;  and  we  are  even  more  immediately 
concerned  with  the  laws  at  work  in  it  than  with  the  absolute  and 
unchangeable  movements  of  the  stars  in  their  courses,  whose  opera- 

*  Webster's  judgment  of  the  popular  authors  was  delivered  in  1830, 
before  the.  publications  of  our  American  writers,  Carey,  List,  and  Colwell. 
It  applied  equally  to  Adam  Smith,  Ricardo,  Say.  Malthus,  and  McGulloch. 


12  POLITICAL  ECONOMY. 

tions  we  cannot  control  by  any  knowledge  of  them  that  we  can 
obtain.  The  disorders  of  the  social  system  are  capable  of  remedy, 
and  are  the  subjects  of  our  agency.  Wait  a  little,  and  you  will 
see  that  some  useful  thinking  may  be  done  among  the  proper  topics 
of  political  economy  without  exaggerating  its  province  and  juris- 
diction. 

D.  It  seems  to  me  that  quackery  re3ts  exclusively  upon  ex- 
perience, which  is  liable  to  all  sorts  of*  misinterpretation  ;  while 
principles,  rightfully,  direct  practice,  and,  I  thought,  science  is  the 
only  safe  guide  of  opinion. 

T.    Quackery    and    empiricism !      Do    you    recollect    that   the 
Jiaconian  philosophy,  otherwise  called  the  inductive  system,  rests 
upon  observation  and  experiment,  and  that  it  builds  all  its  gene- 
ralizations, which  it  calls  laws,  upon  facts  as  they  happen  to  be 
understood,  arranged,  or  clustered  in  kinds,  and  upon  the  general 
or  o-overning  principles  more  or  less  correctly  educed  ?     The  in- 
ductive system  of  reasoning,  which  has  conquered  the  physical 
world,  so  far  as  it  has  gone  in  its  triumphs,  is  simply  and  purely 
empiricism.     A  law  or  principle,  according  to  the  inductive  sys- 
tem, is  nothing  but  a  general  fact  pervading  the  series  or  group 
under  investigation,  and  is   true  only  when  all  the  facts  of  the 
group  are  known  and  justly  valued.     The  facts  of  social  operation 
are  exceedingly  complex  and  difficult  of  estimation.     The  prin- 
ciple of  liberty  intervenes,  and  makes  them  inconstant.     There  can, 
therefore,  be  no  science  of  their  phenomena.     Yet,  to  think  is  to 
theorize  ;    and,  within  the  strict  limits  of  social  phenomena,  we 
may  reason  safely.     Observing  the  proper  limit  of  speculation, 
principles,  restrained  to  their  subjects,  may  be  ascertained.     So 
let  us  try  to  understand  economic  agencies  as  they  severally  work 
in  the  life  and  history  of  men  and  societies.     What  do  we  need 
to  know  except  their  forces  in  action  ?     This  is  all  the  knowledge 
that  science  has  acquired  of  the  lever,  the  screw,  and  the  com- 
pound pulley.     The  use  and  the  government  of  these  machines, 
not  the  power,  in  its  essence,  are  within  our  comprehension. 

P.  You  mean,  I  suppose,  to  consider  the  actual  matters  and 
things  which  enter  into  the  life  of  individuals  and  communities  ; 
and,  to  let  general  principles  or  deductions  take  care  of  them- 
selves, after  the  cautious  way  that  scientists  treat  what  they  call 


POLITICAL  ECONOMY.  13 

empirical  laws,  waiting  for  all  the  facts  which  shall  afford  a  sure 
generalization. 

T.  Not  exactly  that,  and  nothing  more  than  observation  and 
experiment  afford  of  phenomena  ;  but  all  that  we  can  know  by  ex- 
perience, and,  along  with  that,  all  the  light  which  assured  final 
causes  reflect  upon  processes  that  have  an  obvious  tendency  in  the 
designs  of  Providence. 

D.  Now  you  are  mixing  up  morals  and  religion,  creed  and 
prophecy,  with  the  certainties  of  fact,  whose  explanation,  accord- 
ing to  the  inductive  philosophy,  should  be  found  in  themselves.  Is 
this  logical  ?  Is  not  the  investigation  of  every  branch  of  human 
knowledge  distinct,  and  must  it  not  be  restrained  within  its  special 
province  ?  Can  speculative  faith  and  assumed  design  be  safely 
mixed  in  the  search  for  the  truths  of  science  ? 

T.  Preaching  and  practice,  heaven  and  earth,  morals  and  trade, 
are  sometimes,  and  only  too  often,  separated,  and  all  the  worse  for 
the  divorce  in  opinion  and  conduct.  If  man  has  a  compound 
nature,  and  various  and  even  conflicting  impulses,  can  he  be  un- 
derstood, and  the  interactive  phenomena  in  harmonious  results  be 
explained  by  any  one  simple,  single,  and  disintegrated  department 
of  his  functions  ?  If  morals  effectively  mix  themselves  with  mer- 
chandise ;  if  genius,  which  draws  the  known  from  the  unknown 
by  the  a  priori  route  of  reasoning,  is  efficient  even  in  mechanics, 
can  you  strip  the  body  of  business  of  its  soul  and  spirit,  separate 
the  mortal  from  his  immortality,  and  divorce  his  drift  of  daily  life 
from  his  destiny,  his  self  from  the  relations  which  ever  modify  the 
interests  and  actions  of  that  self,  and  thus  make  of  his  animal, 
moral,  and  social  appetencies,  each  a  distinct  and  independent 
piece  of  machinery  ?  If  man  were  only  an  inorganic  clod  of  earth, 
you  might  investigate  him  in  a  chemical  laboratory  ;  but  in  that 
complexity  of  his  constitution,  which  makes  him  a  universe  in 
miniature,  he  must  be  studied  in  the  assemblage  of  his  functions, 
in  order  to  understand  him  in  his  social  relations. 

D.  Would  you  let  the  fatalism  of  Mahometanism,  the  fantastic 
and  blind  servility  to  nature  of  Paganism,  or  even  the  speculative 
faith  of  Christianity,  solve  the  problems  of  our  earthly  existence, 
and  direct  conduct  in  the  world  of  terrestrial  affairs  ? 

T.  No  ;  keep  the  several  branches  of  inquiry  to  their  obviously 


14  POLITICAL  ECONOMY. 

proper  subjects  and  methods  of  research,  and  for  that  very  reason 
allow  them  all  their  respective  forces  in  every  case  in  which  they 
are  concerned,  and  in  which  they  modify  each  other,  and  so  affect 
the  result  of  their  combined  activities.  Chemistry,  confined  to 
its  method  and  means  of  analysis,  would  make  sad  work  in  the 
theory  of  digestion.  It  can  obtain  the  atomic  constitution  of  the 
aliment  and  of  the  gastric  solvent,  but  without  the  vital  forces 
concerned,  of  which  it  knows  nothing,  what  report  can  it  make  of 
the  change  of  food  into  chyle,  and  of  chyle  into  blood,  and  of  blood 
into  bone,  nerve,  and  muscle  ?  What  we  want  in  economic  affairs 
is  the  nutriment,  the  blood,  the  bone,  and  muscle  of  business,  and 
therefore  take  the  composite  man,  the  society  man,  for  our  subject 
iu  his  entireness. 

I  think  that  political  economy,  to  be  good  for  anything,  is  bound 
to  explore  the  offices  of  the  producer,  the  exchanger,  and  the  con- 
sumer of  the  commodities  which  constitute  wealth  in  material 
things  ;  and  that  it  ought  to  derive  thence  useful  instruction  for 
the  statesman,  the  moralist,  and  the  religionist.  I  have  seen  the 
fragmentary  man  of  your  notion  in  a  brickbat,  in  a  worm,  in  a 
monkey,  but  I  never  saw  the  complex  man  himself  so  severed  into 
his  constituents  ;  and  I  do  not  propose  to  consider  him  either  as  a 
couple  of  buckets  of  water,  with  certain  grains  of  salts  in  solu- 
tion, or  as  a  ground  hog,  or  honey  bee,  or  beast  of  prey,  or  any 
other  animal ;  but  as  a  man,  a  being  of  higher  functions  and  des- 
tiny than  anything  created  for  his  use. 

D.  If  all  my  objections,  even  when  they  represent  the  very 
highest  accepted  authorities  in  the  science,  provoke  so  much  preach- 
ing, I  consent  to  waive  them  occasionally,  that  we  may  the  sooner 
get  at  the  substantive  matters  to  be  considered. 

T.  Truths  of  the  highest  rank  must  have  some  use,  for  they 
rule  and  solve  dependent  problems.  Generals  include  and  explain 
particulars  in  their  relations. 

Z>.  Well,  if  you  must  begin  with  outlines,  lay  them  down,  and 
then  proceed  to  fill  them  with  the  particulars  which  they  embrace 
and  classify. 

T.  There  you  are  right.  The  deductive  and  the  inductive 
method  must  be  duly  employed  in  the  systematic  explanation  of 
those  complex  subjects  to  which  they  apply  respectively  ;  and  so 


POLITICAL  ECONOMY.  15 

I  stiart  with  the  proposition  that  man  is  the  centre  of  all  the  gene- 
ralities, and  of  all  the  specialties  of  fact  and  thought  that  are  to 
he  considered  in  the  study  of  political  economy,  and  that  his  de- 
velopment into  constantly  higher  and  better  conditions  is  the  proper 
aim  of  all  science  or  study  concerning  him.  This  ruling  idea  for- 
bids us  to  consider  political  economy  as  a  mere  system,  science,  or 
theory  of  exchange  value,  or  of  men  only  as  agents  in  the  produc- 
tion of  commodities,  for  this  is  not  the  ruling  end  of  human  life,  but 
only  one  of  its  ministries. 

P.  Why,  who  ever  thought  of  man,  the  monarch  of  the  material 
world,  as  made  only  for  the  products  of  industry, — a  machine,  or 
a  slave,  in  his  terrestrial  domain  ?  Does  anybody  suppose  that 
the  chief  end  of  man  in  this  world  is  to  manufacture  pins,  balloons, 
or  galvanic  batteries  ? 

T.  Don't  be  surprised  that  there  is  a  necessity  for  contradict- 
ing the  theories  which  you  have  described  as  impossibilities.  I 
do  not  intend  to  startle  you  with  a  list  of  the  honored  names  of 
those  who  have  baptized  this  heresy  with  the  name  of  philosophy. 
The  citations  will  come  along  as  occasion  demands. 

D.  Your  obvious  grudge  against  the  authorities  whom  the 
world  at  large  receives  and  regards  as  sound  in  theory,  and  as 
guides  in  practice,  must,  I  suppose,  be  indulged. 

T.  The  world  at  large  has  very  little  to  do  with  "  the  dismal 
science"  of  these  anatomists  of  melancholy  and  prophets  of  evil. 
The  teachers  to  Avhom  I  refer  have  made  themselves  reporters  and 
expositors  of  the  market-house,  and  are  busy  underpinning  it  and 
explaining  the  policy  of  huckstering.  They  take  trade  as  the 
inevitable  and  controlling  order  of  things,  and  employ  their  logic 
in  the  explanation  and  justification  of  its  disorders.  For  instance, 
Mr.  Mai  thus  teaches  (and  his  English  successors  and  American 
disciples  follow  him  implicitly)  that  there  is  in  the  natural  order 
of  things  such  a  necessary  disproportion  of  food  to  population  that 
only  "  war,  pestilence,  and  famine  "  can  check  the  ultimate  anni- 
hilation of  the  whole  race.  Ricardo,  on  the  possible  productive- 
ness of  land,  sees  no  escape  from  general  starvation  but  in  the 
exhaustion  of  population  by  their  premature  death.  McCulloch 
says  that,  "  from  the  operation  of  fixed  and  permanent  causes,  the 
increasing  sterility  of  soil  is  sure  in  the  long  run  to  overmatch  the 


16  POLITICAL  ECONOMY. 

improvements  that  occur  in  agriculture  and  machinery."  And 
John  Stuart  Mill,  in  his  chapter  on  "  The  Law  of  the  Increase  of 
Production  from  Land,"  reproduces  these  horrors  in  all  their 
hideousness, — the  over-population  of  Mai  thus,  and  the  constantly 
declining  productiveness  of  land  of  Ricardo  and  McCulloch.  The 
facts  alleged  in  support  of  this  gorgon  theory  of  general  provi- 
dence are  the  existing  social  disorders,  accepted  as  the  necessary 
results  of  the  constitution  of  earth  and  man,  and  in  it  is  a  com- 
plete justification  of  all  the  resulting  evils,  wrongs,  and  tyrannies 
of  society.  Even  Dr.  Chalmers  held  that  the  system  of  English 
charities  only  multiplied  the  population,  increased  the  evil  of  its 
excess,  and  are  therefore  unwarranted  by  enlightened  philanthropy  ! 
Call  }7ou  the  just  indignation  provoked  by  this  libel  upon  Provi- 
dence, this  doom  of  hopelessness  upon  man,  a  grudge!  A  theory 
so  monstrous  and  so  mischievous  might,  indeed,  he  passed  over 
with  contempt,  but  when  it  runs  through  and  poisons  every  funda- 
mental of  a  system  of  popular  instruction  it  calls  for  an  unre- 
served protest  against  its  wickedness. 

In  the  progress  of  our  inquiries  we  needs  must  encounter  the 
issues  of  this  teaching,  for  they  will  be  forced  upon  us  ;  and  I 
notify  you  now  that  we  shall  find  the  monster  which  these  authori- 
ties call  political  economy  and  social  science  hydra-headed. 

P.  Pardon  me  for  suggesting  that  I  would  prefer  a  catechism 
with  the  proofs  to  a  controversy  with  the  dogmatisms  of  the 
popular  authorities.  I  have  no  more  respect  for  the  assumptions 
of  scientists  than  I  have  for  the  guesses  of  sciolists,  and  I  take 
no  interest  in  the  strife  of  words  about  them. 

T.  We  will,  then,  proceed  to  lay  down  the  corner-stones  of  the 
■  •difice  to  be  constructed.  The  lines  drawn  from  them,  like  those 
of  the  mason,  must  determine  the  shape  of  the  work  ;  and  the 
plumb-line  of  proof,  constantly  applied  in  the  process,  will  give 
the  necessary  stability. 

The  subjects  of  political  economy  are  man,  and  those  external 
tilings  which  serve  his  earthly  wants,  which  embrace  his  mental 
and  moral  nature,  so  far  as  these  are  involved  in  his  societary 
relations,  and  the  conditions  and  management  of  those  material 
things  and  forces  which  are  required  to  satisfy  his  necessities. 

Prominently  among  these  requirements  are.  first,  association 


POLITICAL  ECONOMY.  17 

with  his  fellow-man,  as  extensive  and  varied  as  his  capacities. 
Second,  individuality,  or  the  full  development  of  the  individual, 
for  the  reason  that  the  greatest  possible  capabilities  of  the  indi- 
vidual are  promoted  by  the  largest  and  most  varied  association 
with  his  fellow-men  ;  and,  reciprocally,  the  most  complete  associa- 
tion with  his  fellow-men  is  essential  to  the  quality  and  power  of 
the  individual  ;  and,  resultingly,  the  duties,  rights,  and  responsi- 
bility of  the  man  are  in  exact  proportion  to  the  powers  so  culti- 
vated. 

D.  This  programme  advertises  you  an  out-and-out  optimist. 

T.  T  am  not  a  pessimist ;  and  there  is  no  alternative  but  that. 

D.  I  don't  see  that  one  who  takes  things  as  they  are,  and  en- 
deavors their  explanation,  must  be  either  the  one  or  the  other. 
Truth  usually  lies  between  extremes. 

T.  Before  making  the  compromise,  suppose  you  try  to  ex- 
plain, consistently  with  the  fundamental  dogmas  of  the  dismal 
science  which  you  accept,  how  you  find  place  in  it  for  the  existing; 
system  of  public  charities,  or  even  for  the  private  benevolences  of 
philanthropy  ?  If  the  miseries  of  earth  are  in  ftie  policy  of  its 
appointed  fortunes,  can  you  interpolate  aspiration,  benevolence, 
hope,  and  redemption  among  its  provisions  ?  A  theory,  like  a 
house  divided  against  itself,  must  fall.  And  is  it  not  safer,  theo- 
retically, to  attribute  evil  to  disobedience  of  law  and  order,  than 
to  the  necessary  issue  of  the  natural  system  of  things  !  The  Great 
Teacher,  indeed,  said  :  "  The  poor  ye  have  always  with  you." 
But  he  also  said,  "  Seek  first  the'kingdom  of  God  and  his  righteous- 
ness (that  is,  the  divine  order  of  earthly  things),  and  all  these 
things  shall  be  added  unto  you,  to  wit :  what  ye  shall  eat,  what 
ye  shall  drink,  and  wherewithal  ye  shall  be  clothed"  (Matthew 
vi.  31).  He  stated  the  ways  of  God  to  man,  which  is  a  sounder 
philosophy  of  society  than  an  endeavor  to  justify  the  ways  of  man 
to  man.  A  mob  is  made  of  men  in  that  form  of  society,  but  a 
portraiture  of  such  an  assemblage  is  not  a  true  theory  of  human 
relations.  The  disorders  of  the  most  orderly  communities  of  men 
are  also  so  far  a  departure  from  the  creative  intention,  and  give  a 
very  exceptionable  view  of  the  social  system  in  its  purpose  and 
prospects.  The  spring-head  must  not  be  judged  by  the  puddle 
which  it  feeds.     "  Faith  is  the  substance  of  things  hoped  for,  and 


18  POLITICAL  ECONOMY. 

the  evidence  of  things  not  seen."  And  there  is  just  where  the 
philosophy  of  observation  and  experiment  fails  to  meet  the  prob 
lems'  of  moral  science.  The  inductive  system  has  its  province 
exclusively  in  the  inorganic  creation.  It  has  never  had  any  suc- 
cess in  mental  philosophy,  ethics,  civil  government,  or  social  sci- 
ence, or  any  remedial  system  of  animal  or  societary  life.  It  rules 
among  the  phenomena  of  celestial  and  terrestrial  mechanics,  but 
is  utterly  incapable  of  the  expediencies  demanded  in  the  conduct 
of  life  united  with  liberty,  or  will  acting  upon  motives. 


CHAPTER  II. 

WEALTH. 

T.  The  first  topic  to  which  I  shall  call  your  attention  is  Wealth. 
I  begin  the  discussion  by  defining  the  word.  Our  lexicons  trans- 
late the  word  into  other  words,  such  as  riches,  large  possessions 
of  money,  lands,  or  goods,  affluence,  abundance  of  the  means  of 
living,  etc.  They  also  give  it  the  old  English  signification — weal, 
welfare.  The  proper  economic  definition  is,  wealth  consists  in  the 
power  to  command  the  services  of  material  objects.  It  measures 
man's  attained  dominion  over  terrestrial  substances  through  the 
agency  of  natural  forces.  The  promised  dominion  of  the  earth, 
the  sea,  and  the  air,  in  all  their  latent  capabilities  of  service*,  are 
within  our  possibilities,  but  this  rich  gift  is  upon  conditions.  The 
charter  reads,  occupy  and  subdue  (Genesis  i.  28)  ;  conquer 
and  enjoy  ;  know  and  command  ;  learn  the  secrets  of  the  creation 
ami  govern  it.  Yet  the  heir  of  all  things  finds  the  elements  so 
amply  provided  for  his  prospective  use,  everywhere  in  resistance 
to  his  dominion.  The  fields  and  forests  of  his  wide  domain  mingle 
thorns  and  thistles  with  their  offerings  of  the  fruits  adapted  to  his 
needs  :  the  skies  rain  influences  which,  in  their  wild  liberty,  mix 
the  hostile  with  the  subservient;  the  winds,  that  waft  health  on 
their  wings,  are  also  laden  with  pestilence  and  death  ;  his  actual 
life  is  a  battle  with  his  insurgent  subjects,  and  it  depends  upon 
himself  whether  it  shall  result  in  victory  or  defeat.     In  his  igno- 


WEALTH.  19 

ranee  and  nakedness  lie  is  the  slave  of  nature  ;  but  as  he  acquires 
knowledge  he  gains  its  power,  and  grows  into  the  mastery  of  his 
proper  dominion.  He  makes  the  earth  feed  and  clothe  him  ;  he 
converts  the  seas  into  thoroughfares  ;  he  harnesses  the  winds  to 
his  vehicles  of  travel  and  transport ;  and  the  treasures  of  the 
lightning  are  made  to  be  the  speediest  and  most  obedient  of  his 
messengers.  He  learns  the  laws  of  his  universe,  and  his  achieve- 
ments follow  in  the  wake  of  his  discoveries.  The  world  was  created 
by  a  word,  and  is  subject  to  its  wisdom  under  the  agency  of  the 
creature  made  in  the  image  of  his  Creator. 

D.  Following  an  hypothesis,  you  anticipate  experience.  You 
borrow  from  immortality  the  light  to  illustrate  the  mortal  ;  but  is 
not  human  science,  or  the  science  of  human  things,  the  result  of 
actual  knowledge  ? 

T.  I  follow  the  light  ahead.  Your  favorite  guide,  is  behind 
you,  as  if  you  walked  backward.  Your  trusted  experience  is  of 
the  past,  which  casts  only  a  shadow  of  itself  upon  your  pathway, 
and  usually  darkens  as  much  as  it  directs  the  pathway  in  discovery. 

I).  The  great  Dr.  Johnson,  however,  said:  "  Experience,  which 
is  constantly  contradicting  theory,  is  the  only  test  of  truth." 

T.  Which  is  true  enough  as  a  test  of  problems,  theories,  and 
predictions,  but  certainly,  the  knowledge  of  the  known  is  not  a 
true  test  of  the  attainable  unknown — the  a  priori  leads  the  a  pos- 
teriori  at  every  step  of  advancement.  Genius  has  intuitions  and 
inspirations;  talent  is  its  pupil.  Experience  is  limited  to  revision 
and  1ms  nothing  of  forecast ;  it  records  achievement,  but  does  not 
prejudge  the  future.  Experience  figures  in  social  history  as  a 
blind  beggar  led  by  a  dog,  with  a  wallet  of  broken  victuals  on  its 
back.  How  it  staggers  and  squirms  when  it  encounters  invention 
which  knocks  its  crutches  from  its  support !  Come,  sir,  science, 
sound  and  alive,  is  not  a  dirge  or  an  epitaph,  but  a  reveille.  All 
real  progress  in  learning  is  daylight  springing  from  the  twilight 
of  the  accomplished  into  the  brightness  of  the  coming. 

P.  I  understand  you  to  mean  that  wealth  is  the  mastery  of 
nature,  and  that  political  economy  is  not  a  mere  science  of  values 
as  McCulloch  defines  it,  or  of  catallactics — a  theory  of  exchange 
— according  to  Archbishop  Whately,  or  that  its  measure  is  money's 
worth  in  service  and  trade. 


20  POLITICAL  ECONOMY. 

T.  No.  I  prefer  the  rendering  of  Stephen  Colwell :  "  the 
theory  of  human  well-being,  as  it  relates  to  the  production  and 
distribution  of  wealth." 

P.  This  definition  is  to  me  an  abstraction.  Please  tell  us  in 
what  wealth  consists — the  substances  or  things  in  which  it  embo- 
dies itself. 

T.  In  this  limited  aspect  of  the  subject,  I  answer  that  its  sub- 
stantive forms  are  money,  land,  implements,  machinery,  food, 
clothing,  books,  furniture,  ships,  wagons,  ploughs,  and  the  like 
tangible  objects  of  property  ;  and,  along  with  these  subjects  of 
weight  and  measure  by  scale  and  rule,  the  intangible  efficiency 
that  there  is  in  Ideas,  and  the  great  auxiliary  of  material  wealth 
that  there  is  in  Credit.  Substances  are  instruments  and  subjects, 
and  their  employment  is  under  the  direction  of  agents.  Perhaps 
I  can  better  meet  your  thought  by  a  definition  of  Capital,  which 
embraces  the  materials  of  wealth,  and  the  efficiencies  which  em- 
ploy them  in  human  service. 

P.  Does  not  J.  S.  Mill  cover  this  ground  satisfactorily  in  say- 
ing, "  Capital  is  that  portion  of  a  man's  possessions  which  he  em- 
ploys in  further  production  ?" 

T.  That  is  the  commercial  meaning  of  the  term,  but  not  nearly 
the  economical,  if  by  "possessions"  is  meant  only  material  things. 
All  the  effective  substances  and  forces  employed  in  production 
ought  to  be  embraced  in  the  technical  term  Capital.  Surely  an 
axe  used  in  felling  a  tree  is  not  more  efficient  in  the  production  of 
lumber  than  the  arm  that  wields  the  axe.  and  the  will  that  com- 
mands and  directs  the  effort.  It  seems  to  me  that  theoretic  mate- 
rialism gets  as  stupid  in  logic  as  the  brute  matter  to  which  it 
confines  its  consideration. 

P.  Wealth  and  capital,  according  to  your  apprehension,  are 
not  identical. 

T.  Not  ipuite  the  same  in  substances  and  agents.  "Wealth 
properly  includes  all  the  substances  and  forces  which  give  man 
the  power  to  compel  matter  to  his  use  :  while  Capital,  in  its 
restricted  meaning,  embraces  only  the  substantive  things  and  their 
proper  forces,  employed  in  the  production  of  commodities  or  values. 
LABOR,  in  fact,  has  an  equal  right  to  be  regarded  as  capital. 
because   it  is  a  fellow  factor  with  all  the  material  forces  of  pro- 


WEALTH.  21 

ductive  industry.  The  only  reason  for  treating  it  separately  is 
on  account  of  its  mixed  character  of  mechanic  force  and  human 
capabilities,  moral,  mental,  and  physical.  A  laborer  has  his  cap- 
ital in  his  bones  and  sinews,  in  his  skill  and  will,  for  these  are  his 
tk  possessions  employed  in  further  production,"  and  they  are 
instruments  as  much  as  the  tools  through  or  by  which  he  works. 
He  is  a  man,  a  guest,  not  the  ghost,  of  the  fleshly  tenement  he 
occupies  ;  that  tabernacle  is  his  warehouse  and  the  powers  stored 
up  in  it  arc  his  capital  in  the  work  of  production.  We  must  keep 
the  man  in  view  always  as  the  machinist,  not  the  machine,  in  labor. 
P.  Is  real  wealth  measured  by  money  or  money's  worth  as  we 
have  it  in  statistical  reports? 

T.  I  must  refer  you  to  the  definition  already  given  for  an  ade- 
quate answer.     It  consists  in  the  power  to  command  the  services 
of  nature,  and  therefore  embraces  things  that  have  no  exchange 
value  ;  and  in  this  it  differs  from  the  things  which  have  a  market- 
price  under  the  laws  and  usages  of  society.     Its  constituents  range 
from  the  simplest  provision  for  the  needs  of  the  animal  life  of  man 
up  to  the  highest  enjoyments  of  his  mental  and  moral  life.     The 
means  of  supply  to  all  these  requirements  are  truly  wealth — they 
are  all  "  possessions  which  he  employs  in  further  production"   of 
their  several  kinds  of  capital.    The  food  required  by  the  appetites, 
the  clothing  for  the  defence  and  adornment  of  the  body,  are  no 
less  and  no  more  constituents  of  wealth,  than  are  the  beauty  that 
feasts  the  eye  with  forms  and  colors,  the  music  which  charms  the 
sense,  or    the  knowledge  which   enriches   the   mind.      Health  is 
wealth  ;  and  happiness,  which  is  properly  defined  the  gratification 
of  any  and  every  active  faculty  in  all  their  severalties  and  kinds, 
is  so  much  of  wealth,  or  in  other  words  all  utilities  are  riches. 
You  perceive  that  I  cannot  constrain  myself  to  measure  wealth  by 
the  exchange  value  of  commodities.     I  do  not  say  that  a  hearty 
laugh,  like  a  bushel  of  potatoes,  is  worth  a  dollar ;  or,  that  the 
estimates  of  the  market-house  are  the  equivalents  of  the  services 
rendered  to  the  proper  life  of  man.     Whatever  is  the  currency  of 
the  grand  commerce  which  we  have  with  the  world  of  men  and 
things  around  us  is  our  wealth.     Life  is  a  system  of  exchanges, 
and  all  that  we  get  and  all  that  we  give   is  the  medium  and  the 
measure  of  value  in  our  commerce  with  men  and  things. 


22  POLITICAL  ECONOMY. 

D.  To  come  down  to  business :  The  census  valuation  of  the 
real  and  personal  property  of  the  United  States  is  put  in  1870  at 
thirty  thousand  millions  of  dollars,  and  the  population  at  something 
less  than  forty  millions.  Do  these  estimates  express  or.  proxi- 
mately represent  the  aggregate  and  distributive  wealth  of  the 
nation  ? 

T.  These  sums  are  calculations  of  the  principal  exchange  value 
of  our  possessions,  and  of  the  number  of  our  people.  But  fol- 
lowing my  idea  of  wealth,  I  ask,  what  dividend  of  current  sub- 
sistence the  principal  yields, — what  command  it  gives  over  the  sup- 
ply of  our  wants  ?  The  Rocky  Mountains  were  prospectively  and 
potentially  worth  all  the  gold  and  silver  which  they  held,  less  the 
labor  of  extracting  them,  Avhen  the  territory  was  occupied  by  its 
savage  inhabitants  ;  but  were  those  creatures  any  the  wealthier 
for  the  principal  value  of  their  domain  ?  Things  are  worth  what 
they  yield.  What  was  the  effective  value  of  the  thirty  thousand 
millions  in  the  year  1873,  when  the  country  was  bankrupt  ?  Were 
they  available  for  half  their  nominal  amount  ?  Or,  a  fairer  instance, 
what  is  the  capital  value  of  the  West  of  Ireland  in  a  period  of 
famine,  measured  by  what  it  yields  to  its  cultivators  ? 

It  is  uses,  not  potentialities  ;  it  is  actualities,  not  latent  possi- 
bilities, that  make  the  wealth  which  is  the  welfare  of  the  owners 
of  property. 

The  British  way  of  estimating  the  nation's  wealth  does  not  con- 
cern itself  with  a  computed  principal  of  exchange  values,  but  looks 
only  to  the  annual  product  of  the  nation's  fixed  property,  and  of 
the  current  industrial  yield  of  its  capital,  labor,  and  trade.  Nor 
does  it  take  account  of  the  stocks  invested  in  industrial  and  com- 
mercial enterprises,  but  of  the  actual  fruits  and  profits  of  business 
of  all  kinds.  The  authorities  there  are  simply  accountants  of 
earnings  ;  they  consider  the  rental,  not  the  price  of  lands,  and 
the  interest,  not  the  principal  of  the  funds  invested.  They  do 
not  assume  the  work  of  the  principal  by  what  it  might  do,  but 
what  it  actually  does  do,  in  the  returns  it  mikes  in  employment. 
In  this  procedure  the  English  statisticians  are  wise,  ami  escape 
the  illusions  to  which  our  census  valuations  are  so  greatly  exposed. 

I).  The  current  service  work  of  property  is,  indeed,  only  what  it 
yields  in  profit,  interest,  or  dividends  :   but  it  must  have  some  cer- 


THE    GROWTH    OF    WEALTH — ITS    AGENCTES.  Z6 

tain  intrinsic  value  independent  of  changes  in  trade  prices,  else  it 
could  not  at  any  time  command  a  price  in  exchange  ;  its  possibili- 
ties, as  well  as  its  fruits,  are  estimated  in  its  valuation  in  business. 
T.  Yes,  but  remember  that  the  benefits  which  it  affords  are  just 
what  it  yields  at  and  for  the  time.  A  man  may  own  lands  or 
stocks  that  have  been,  and  may  again  be,  worth  thousands  of  dol- 
lars in  market,  but  suppose  that,  during  a  business  revulsion,  they 
yield  him  nothing,  would  you  call  him  wealthy;  and  what  would 
you  say  of  his  welfare  ?  If  well-being  is  really  the  meaning  of 
the  word  wealth,  he  may  live  and  die  in  destitution  in  spite  of 
nominal  past  or  future  valuations.  A  man  is  wealthy  whose  prop- 
erty yields  him  the  means  of  commanding  an  abundance  of  the 
commodities  and  services  he  requires.  Our  definition,  therefore, 
holds  firmly  against  all  the  accidents  which  affect  the  subject. 
Labor  is  the  source  of  wealth  or  welfare,  because  it  forces  products 
or  the  yield  of  property. 


CHAPTER  III. 
THE  QROWTH  OF  WEA.LTH— ITS  AGENCIES. 

T.  Assuming,  for  the  present,  that  wealth  grows  in  all  well- 
constituted  societies,  and,  in  proportion  to  their  social  and  indus- 
trial development,  we  will  get  proof  and  the  use  of  the  proposi- 
tion by  examining  the  laws  operative  in  the  process.  Let  me  give 
you  an  index  to  the  several  heads  of  the  inquiry  :  — 

We  may  accept  Adam  Smith's  aphorism,  that  "  labor  is  the 
first  price — the  original  purchase-money — that  is  paid  for  every- 
thing ;"  taking  care  not  to  abandon,  as  Smith  did,  this  funda- 
mental principle,  by  limiting  its  force  to  that  "  rude  stage  of  so- 
ciety which  precedes  the  accumulation  of  stock  and  the  appropria- 
tion of  land."  Mr.  Carey's  doctrine  of  labor  value  in  all  production 
is  the  proper  correction  of  Smith's  foundation  principle,  and  under 
it  we  will  consider  the  production  and  growth  of  wealth  under  the 
following  specific  agencies  and  forces:  — 


24  POLITICAL  ECONOMY. 

1st.  Natural  labor  directly  applied  in  production. 

2d.  Labor-saving  machinery,  or  artificial  labor. 

3d.  The  resulting  improvement  in  quality  and  quantity  of  com- 
modities, agricultural  and  mechanical. 

4th.  Improvement  in  transportation,  foreign  and  domestic. 

5th.  Substitution  of  the  cheap  and  abundant  supplies  for  the 
costly  and  scarce. 

6th.  Facilities  of  commerce — money  and  credit. 

D.  Pardon  me  for  forming  a  pre-judgment  of  half-finished  work. 
But  I  am  puzzled  that,  in  enumerating  the  sources  of  wealth  and 
its  elements,  you  give  no  place,  much  less  the  primary  and  most 
conspicuous  place,  to  what  economists  call  "  the  natural  and  inde- 
structible powers  of  the  soil."  There  ought  to  be  some  place  for 
the  raw  material  of  all  commodities,  unless  you  can  make  your 
industrial  world  out  of  nothing.  If  ''Mother  Earth"  and  her 
supplies  were  stopped,  I  think,  your  theoretic  account  of  human 
wealth  would  have  no  ground  to  stand  on. 

T.  That  last  hit,  I  own,  is  capital  as  a  witticism  ;  but  what  is 
it  worth  in  logic  ?  Let  me,  in  turn,  put  a  more  pertinent  question 
to  you:  Taking  wealth  in  Ian  I  property  to  be  its  exchange  value, 
can  you  tell  me  how  much  of  its  price  is  traceable  to  "  the  original 
and  indestructible  power  of  the  soil ;"  and  how  much  is  due  to 
the  labor  employed  in  its  improvement  ?  Take  any  lot  of  ground 
in  any  of  our  principal  cities,  charge  it  with  the  cost  of  all  the 
labor  which  has  given  it  its  present  worth  in  other  things, — the  cost 
of  buildings,  with  its  proper  share  in  the  cost  of  the  streets,  the 
drainage,  and  of  the  police  service,  which  make  a  part  of  its  con- 
venience, and  therefore  of  its  value  ;  add  the  harbor  improvements, 
the  land  conveyances  of  travel  and  freight,  with  so  much  of  its 
valuable  advantages  as  are  found  in  its  churches,  school-houses, 
theatres,  market-houses,  libraries,  hotels,  parks,  in  its  immediate 
vicinage  ;  its  shipping  and  railroads  ;  its  gas  and  telegraph  ser- 
vice, and  all  the  social  advantages  which  it  has  been  made  to 
command,  all  of  which  are  chargeable  to  the  accumulated  worth 
of  the  premises,  and  then  see  what  is  left  of  the  present  market 
value.  That  lot,  in  its  natural  condition,  would  not  he  worth  the 
blanket  that  would  cover  it. 

D.  Land  has  in  itself  advantages  of  situation  ;  for  one  instance, 
its  neighborhood  to  market. 


THE    GROWTH    OF    WEALTH — ITS    AGENCIES.  "25 

T.  Labor  made  that  market  for  it.  It  has  no  such  advantage 
to  the  aboriginal  Indian. 

D.  What  do  you  say  of  the  water-power  which  moves  machinery  ? 

T.  Just  what  I  must  say  of  the  currents  of  air  which  work  in 
human  service  as  the  streams  of  water  do  when  they  are  captured 
and  subdued.  Like  the  ocean  and  the  atmosphere  in  bulk,  they 
are  latently  capable  of  service  ;  but  they  promote  the  growth  of 
Avealth  just  in  the  form  and  to  the  extent  that  human  labor  rules 
their  inherent  forces. 

Moreover,  land  has  no  such  "  indestructible  powers "  in  the 
composition  of  value  as  the  economic  formula  assumes.  In  the 
fields  long  cultivated  all  that  give  them  natuial  fertility  has  been 
exhausted,  and  artificially  replaced  often  and  completely.  Matter, 
indeed,  cannot  be  destroyed  ;  but  its  forms  and  the  forces  of  its 
atoms  do  by  use  become  incapable  of  their  primitive  services. 

D.  Would  you  treat  land,  and  discuss  its  offices  and  uses,  not 
as  a  vital  and  original  force,  or  body  of  independent  forces,  but  as 
a  machine  ? 

T.  If  thorough  examination  shall  make  manifest  its  conditions 
and  its  management  in  use  to  correspond  to  those  other  combina- 
tions of  materials  which  we  shape  and  arrange  so  as  to  give  results 
of  which  they  are  incapable  in  their  natural  state,  we  shall  see  that 
an  inresident  vitality  does  not  take  any  organism  out  of  the  cate- 
gory of  mechanics.  Machinery,  called  for  distinctiveness  celestial, 
is  by  all  authors  and  thinkers  applied  to  the  movements  of  the 
heavenly  bodies  whose  appetencies  are  innate,  as  truly  as  are 
those  of  land.  There  is  a  mechanism  of  the  human  frame  and  in 
its  offices,  such  as  respiration,  circulation,  and  locomotion  ;  and, 
as  machinery,  these  functions  must  be  considered,  and  may  be  so 
named,  for  the  purposes  of  investigation  and  description. 

D.  There  is,  nevertheless,  something  rather  startling  in  a  clas- 
sification forced  to  embrace  the  animate  with  the  inanimate.  I 
have  not  heretofore  bee^i  able  to  see  such  connection  between  the 
substances  of  a  mountain  or  of  a  meadow,  and  of  a  clock  or 
steamboat. 

T.  Reflect.     The  spontaneous  products  of  the   soil  serve  the 
irrational  races  without  their  management ;  but,  to  become  utili- 
ties to  man,  they  must  be  converted  by  his   administration  into 
3 


26  POLITICAL  ECONOMY. 

conformable  supplies.  He  removes  its  trees  and  grasses,  and  sub- 
stitutes his  grains  and  roots  ;  he  ploughs  its  surface  and  sows  the 
seeds,  just  as  he  digs  the  ores,  and  smelts  and  forges  them  into 
forms  for  his  use.  His  instruments  are  all  mechanical,  and  all 
their  subjects  are  under  its  laws  in  his  use  of  them. 

D.  Still,  the  word  machine  is  customarily  given  only  to  arti- 
ficial instruments,  commonly  consisting  of  various  contributing 
and  inter-active  parts,  which  serve  and  regulate  the  intended  ope- 
rations and  effects. 

T.  Well,  you  have  just  as  accurately  described  the  art  and  labor 
of  agriculture  in  its  government  and  modification  of  the  earth's 
innate  powers,  and  you  may,  if  you  must,  call  the  work  vital 
mechanics  or  terrestrial,  or  by  any  other  name  that  does  not  alter 
the  facts.  The  struggle  from  ignorance  and  feebleness  all  the  way 
up  to  maturity  of  knowledge  of,  and  power  over,  nature,  is  a  study 
in  the  use  of  the  physical  machinery  of  agents,  instruments,  and 
subjects. 

P.  As  words  are  instruments  in  the  communication  of  thought, 
it  occurs  to  me  now  that  even  language  in  its  modifications  of  form 
is  in  an  allowable  and  useful  sense  the  machinery  of  converse  ; 
that  grammar  is  a  constructive  system,  more  like  carpentry  than 
Lindley  Murray's  ideal  definition  as  "  the  art  of  speaking  and 
writing  the  English  language  with  propriety,"  which,  by  including 
lexicography  and  rhetoric,  embraces  too  much,  and  confuses  the 
art.  He  puts  the  vital  or  ideal  into  the  purely  mechanical  proper- 
ties and  uses  of  words,  with  the  effect  of  vitiating  every  one  of  his 
definitions  of  the  terms  of  the  art. 


MAN    AND    LAND — OCCUPATION    OF    THE    EARTH.  27 

CHAPTER  IV. 
MAN  AND  LAND— OCCUPATION  OF  THE  EARTH. 

T.  Now  let  us  proceed  with  the  most  general  facts  in  relation 
to  man's  occupation  and  cultivation  of  the  earth,  which  will  em- 
brace both  the  laws  governing  colonization  or  emigration,  and  the 
rules  in  the  selection  of  the  kinds  of  land  brought  into  occupancy 
and  cultivation. 

D.  The  choice  of  settlements  in  the  various  parts  of  the  earth, 
and  the  selection  of  soils  for  individual  occupation  and  cultivation, 
may  be  matters  of  history,  but  cannot  need  the  researches  of  the- 
ory. Man  is,  not  like  the  beasts  and  birds,  limited  to  special 
localities.  He  is  cosmopolitan,  with  the  world  before  him  where 
to  choose,  as  Milton  has  it,  and  Providence  his  guide.  It  is  clear 
enough  that  having  the  means  of  travel  and  transportation,  he  will 
choose  the  regions  that  are  the  most  fertile  and  salubrious,  and, 
in  other  respects,  the  best  adapted  to  his  use.  Without  doubt 
when  land  is  abundant  and  population  scarce,  men  will  take  the 
best  soils  and  leave  those  of  inferior  quality  to  the  next  comers  ; 
and  so  on,  till  the  last  arable  acre  and  of  the  lowest  quality  is,  in 
the  end,  of  necessity  taken  by  the  last  class  in  the  grades  of  suc- 
cessive takers.  Ricardo  founds  his  doctrine  of  Rent  upon  this 
progressive  decline  of  productiveness  of  soils.  In  the  nature  and 
order  of  things  this  process  of  individual  appropriation  is  settled, 
and  no  other  theory  than  that  of  choice,  limited  by  opportunity, 
seems  to  be  required. 

T.  If  in  the  whole  round  of  speculation  there  can  be  found  a 
theory  utterly  baseless,  Ricardo's  theory  of  Rent  is  that  eminent 
one.  In  assuming  its  plausibility  you  have  started  a  multifold 
variety  of  questions,  which,  I  have  the  pleasure  of  informing  you, 
have  been  settled  against  you  by  the  most  conclusive  facts  that 
theory  can  encounter. 

D.  Pardon  me.  Ricardo's  theory  of  Rent  commanded  instant 
and  general  acceptance.  The  political  economists  of  reputation 
have  never  called  it  in  question.  The  mere  statement  of  his  pro- 
positions makes  them  self-evident.     Can  there  be  anything  doubt- 


23  POLITICAL  ECONOMY. 

ful  in  them  ?  Allow  me  to  state  them  in  their  self-supporting 
array.  He  assumes  that  when  the  quality  of  land,  No.  1  in  fer- 
tility, is  still  open  to  occupancy,  nobody  will  pay  rent  for  any 
portion  of  it ;  but  when  that  prime  quality  shall  have  been  all 
appropriated,  the  next  comers,  having  nothing  left  them  but  quality 
No.  2,  will  of  course  pay  the  value  of  the  superior  productiveness 
of  No.  1  for  its  advantages.  Here  rent  begins,  and  so  on  the 
rent  of  the  superior  grades  will  increase  through  all  the  interme- 
diate qualities  until,  as  he  states  it,  No.  7  is  reached.  The  use 
of  each  successive  quality  adding  its  value  to  that  of  the  first  and 
all  the  following  grades.  Surely  No.  7  must  pay  the  difference 
of  value  between  it  and  No.  (3  if  it  would  make  the  exchange. 
The  arithmetical  progression  of  numbers  is  not  more  certain  than 
this  anti-climax  of  value  in  land  occupation.  The  very  symmetry 
of  the  formula  seems  to  carry  with  it  all  the  harmonies  of  truth. 

T.  You  have  stated  the  Ricardo  doctrine  of  Rent  with  sufficient 
explieitness  and  accuracy;  failing,  however,  to  face  its  horrid  con- 
sequences, Avhich  both  dishonor  Providence  and  threaten  despair 
to  humanity;  but,  waiving  all  present  objections  to  the  moral  of 
the  fable,  let  me  call  your  attention  to  some  very  obvious  and 
familiar  facts  which  your  theory  does  not. meet  or  dispose  of. 
The  primary  fact  is  that  Land  in  the  state  of  Nature,  and  open 
to  choice,  must  be  subdued  in  order  to  be  brought  into  service. 
Its  forests  must  be  felled,  its  swamps  drained  ;  its  mould  must  be 
broken  up,  and  the  seeds  of  the  required  harvest  must  be  sown  ; 
and  the  implements  of  the  clearing  and  culture  must  be  provided. 
The  liberty  of  choice  is  therefore  put  under  conditions.  It  is  not 
merely  a  preference  founded  upon  degrees  of  fertility  or  other 
conditions  of  situation.  There  must  be  a  calculation  of  resistances 
in  the  selection.  The  rank  fertility  of  the  best  soils  may  demand 
labor  and  capital  which  the  pioneer  does  not  possess.  The  richest 
of  all,  which  he  might  otherwise  select — the  marshes  that  have 
drained  the  surrounding  hills  of  their  wealth  for  ages — are  in 
open  and  obstinate  resistance  to  his  very  limited  resources.  In  a 
variety  of  prepared  and  perfected  commodities  a  man  will  choose 
and  take  the  best  for  immediate  use,  because  he  is  not  embarrassed 
by  any  conditions  precedent  to  the  enjoyment,  but  when  there  is 
resistance  to  be  encountered,  and  acquirement  must  be  the  result 


MAN    AND    LAND — OCCUPATION    OF    THE    EARTH.  29 

of  a  conquest,  the  case  is  changed.  A  schoolboy  will  not  choose 
a  contest  with  the  stoutest  on  the  playground.  He  will  not  choose 
a  combatant  away  above  his  match,  but  will  prudently  refuse  an 
antagonist  any  way  from  No.  1  down  to  his  own  figure  if  it  hap- 
pens to  be  No.  5  or  6.  It  is  not  historically  true  that  the  pioneer, 
or  any  early  settler  of  new  lands,  chooses  the  richest  and  best 
soils.  He  is  not  a  match  for  them.  It  is  matter  of  fact  that, 
passing  by  and  avoiding  the  bottom  lands,  heavily  timbered,  and 
those  that  are  pestiferous  with  the  exhalations  of  their  abundant 
vegetation,  which  riots  and  rots  on  their  surface,  he  chooses  the 
hillsides,  lightly  timbered,  well  drained,  and  easily  cultivated, 
consenting  to  climb  up  and  down  the  acclivities  until,  in  process 
of  time,  increase  of  capital,  and  of  natural  and  artificial  labor 
qualify  him  to  invade  the  richer  land  below  him.  Do  you  know- 
why  the  earliest  thoroughfares  of  trade  and  travel  in  the  middle 
States  of  this  new  country  wound  up  and  down  the  hills  and  ridges 
of  their  routes  ?  Can  there  have  been  any  reason  for  it  except 
that  quality  Nos.  3,  4,  or  5,  among  the  soils,  was  of  necessity 
chosen  by  the  first  comers,  and  travellers  and  traders  were  obliged 
to  plod  the  ups  and  downs  and  round-abouts  to  find  the  rest  and 
hospitalities  of  their  wearisomely  indirect  journeys  ?  In  Penn- 
sylvania, a  hundred  years  ago,  the  eldest  son  had  the  right  of 
choice  among  the  lands  of  intestate  decedents.  He  took  in  pre- 
ference the  hills,  and  left  the  hollows  and  low  lands  to  his  coheirs. 
Many  family  quarrels  began  in  that  distribution,  and  some  of  them 
have  not  yet  been  healed,  because  the  unfortunates  of  that  early 
day  were  compelled  to  accept  Nos.  1  and  2  which  they  then  could 
not  manage.  The  richest  lands  of  the  commonwealth  which  lay 
vacant  for  half  a  century,  have  since  been  opened  and  drained  by 
our  railroad  companies,  and  the  swamps  have  been  converted  into, 
gardens,  of  a  tenfold  productiveness  above  the  hillsides  at  first 
preferred. 

In  the  history  of  all  settlements  of  land,  every  fact  contradicts 
the  basis  assumptions  of  the  Ricardo  theory.  Every  fact  an  I 
every  instance  reverses  his  order  of  pi'ogression  from  the  better 
to  the  worse.  The  true  progress  is  from  the  lower  qualities  of 
soil,  from  No.  5  or  6  or  7,  upwards  toward  No.  1,  which,  by  the 
bye,  has  never  yet  been  reached,  either  in  the  British  Islands  or 


30  POLITICAL  ECONOMY. 

in  America.  Turn  Ricardo's  symmetrical  table  of  grades,  in  the 
progress  of  settlement,  upside  down  if  you  would  have  the  truth 
of  experience  and  find  the  governing  law.  The  correspondence 
of  this  law  is  seen  in  the  route  of  progress  which  men  make  in 
their  government  and  employment  of  all  other  machines,  imple- 
ments, and  subjects  of  their  industries.  They  began  with  stone 
axes,  passing  afterwards  through  those  of  copper,  brass,  and  iron, 
until  they  arrived  at  steel;  from  the  distaff  and  the  spindle  to  the 
spinning-jenny  and  the  power-loom;  from  the  canoe  to  the  steam- 
ship ;  from  the  packhorse  to  the  locomotive  engine.  Nowhere  do 
they  begin  with  the  best  subjects  or  machinery.  Human  progress 
is  always  in  the  same  direction — from  the  poorer  to  the  better. 
The  question  of  settlement  and  occupancy  of  land  does  not  rest  in 
a  choice  of  inherent  qualities,  but  in  adjustment  of  the  chooser  to 
the  task  of  effective  control.  Let  me  also  cite  the  fact  that  the 
richest  soils  in  the  world  have  been  abandoned,  when  the  occupants 
became  poor  in  capital  and  labor.  The  Campagna  di  Roma,  and 
the  Daccan  in  India,  are  examples.  The  former,  up  to  the  gates 
of  the  Eternal  City,  once  covered  with  the  villas  of  its  citizens, 
is  now.  abandoned  to  sickly  herdsmen,  who  are  exposed  to  the 
miasma  of  its  uncontrolled  fertility  ;  and  Bishop  Heber  tells  us 
that  the  tiger  has  returned  to  the  jungles  in  a  district  of  India, 
once  the  site  of  temples  and  towns.  The.  declining  forces  of  num- 
bers and  means  have  surrendered  the  lands  No.  1  in  their  natural 
productiveness,  and  retreated  to  the  less  fertile  lands  better  adapted 
to  their  command. 

D.  I  am  not  provided  with  any  adverse  instances.     There  may 
be  a  beauty  in  theory  which  is  not  strength.     I  recollect   that 
Newton's  doctrine  of  gravitation  was  very  effectually  resisted  by 
.  Descartes'  notion  of  vortices  or  whirlpools  of  the  planets. 

In  some  connection  with  your  theory  of  the  occupation  of  land, 
and,  perhaps,  dependent  upon  it,  how  do  you  dispose  of  the  doc- 
trine that  man  is  cosmopolitan  and  is  capable  of  accommodation, 
through  artificial  agencies,  to  all  climates  and  regions  of  the  earth, 
and  is  thus  distinguished  from  the  inferior  animals,  who  are 
bounded  in  their  habitudes  by  soil,  and  climate,  and  by  their 
dependence  upon  the  spontaneous  productions  of  the  earth? 

T.    1  dispose  of  the  cosmopolitanism  of  man, — of  all  men  alike, 


THE    LAW    OF    MIGRATION,    ETC.  31 

1  mean,  by  denying  it.  The  human  race  or  races  may,  though 
inexactly,  be  called  cosmopolitan  ;  but  no  family  of  man  is  so. 
The  varieties  of  the  race,  taken  in  the  aggregate,  are  destined  to 
occupy  and  replenish  the  whole  habitable  globe  ;  and  for  this  pur- 
pose a  thousand  stocks  or  families  are  distinctively  and  variously 
qualified,  just  as  there  are  a  thousand  differences  of  physical  ad- 
justments of  condition  in  the  thousand  diverse  regions  of  the  earth. 
To  prevent  the  entire  race  from  desiring  and  struggling  for  any 
one  location,  each  variety  is  fitted  and  qualified  for  the  ultimate 
occupation  of  a  distinctive  region  by  a  distributive  impulse,  not 
wholly  unlike  the  instincts  that  dispose  and  limit  the  residences  of 
the  fowls  of  the  air,  the  beasts  of  the  forests,  and  even  the  fishes 
of  the  sea. 

Could  harmony  be  provided  for  by  an  universal  cosmopolitan- 
ism among  men  any  more  than  among  the  inferior  creation  ? 
Depend  upon  it,  a  priori,  the  entire  occupants  of  the  earth,  in- 
cluding its  human  population,  are  governed  by  a  law  which,  how- 
ever disturbed  by  accident,  resulting  from  the  modicum  of  liberty 
and  casual  accommodation  accorded  to  man  and  animals,  is  ever 
working  toward  the  purpose  of  the  Creator.  Is  not  this  probable 
as  it  is  necessary  ?  And  shall  we  not  hold  words  and  current 
notions  under  correction,  so  far  as  they  lead  to  error  in  opinion 
and  mischief  in  practice  ?  We  must  give  this  subject  a  special 
section. 


CHAPTER  V. 


THE  LAW  OF  MIGRATION  AND  OCCUPATION  OF  THE 
EARTH  BY  THE  HUMAN  RACE. 

I).  The  law  of  migration!  Instead  of  law,  might  you  not  say 
the  liberty  of  migration.  Freedom  and  capability  of  inhabitation 
seems  to  be  the  character  of  man  universally.  But  you  have  a 
habit  of  contradicting  the  authorities  whose  teachings  are  so  restful 
and  so  easily  understood. 

T.  In  this  case  I  am  not  irreverent ;  I  only  invite  you  to  un- 
derstand Milton's  oracle,  "The  world  before  them,  where  to  choose, 


32  POLITICAL  ECONOMY. 

and  Providence  their  guide  ;" — the  condition  annexed  to  the  rep- 
resentative  man's  freedom  of  choice — the  guidance  of  Providence. 
The  law  of  migration  covers  this  guidance,  this  general  providence 
of  the  earth's  economy,  in  a  larger  sense,  probahly,  than  Milton 
intended.  It  is  a  law  of  climate,  mainly  determined  by  isother- 
mal lines,  by  which  freedom  of  habitat  is  limited  ;  and  it  is  not 
affected  by  the  freedom  of  casual  travel,  exploration,  or  invasion. 
In  these  movements  the  enterprising,  the  curious,  and  the  restless 
have  an  exceptional  and  a  temporary  exemption  from  the  restrain- 
ing conditions  of  their  nativity.  The  law  relates  to  and  governs 
the  permanent  homes  chosen  by  emigrants,  with  some  allowance 
for  the  influence  of  acclimatization,  of  which  even  vegetables  are 
capable.  The  laws  of  life  are  nowhere  stifly  inflexible.  They  are 
not  chemical  or  astronomical,  but  vital,  and  subject  to  such  modi- 
fication as  gives  our  free  agency  in  their  management  such  limited 
control  as  shall  serve  our  ends,  but  without  interfering  with  their 
ultimate  tendencies.  Man  rules  the  creation,  but  the  Creator 
overrides  it. 

In  the  temperate  zone  we  have  a  compromise  of  the  extremes  of 
climatic  conditions  and  constitutions  nearly  alike,  or  riot  very  un- 
like, so  that  the  nationalities  of  the  zone  generally  can  adjust  their 
differences  to  it,  and  wear  them  into  conformity;  but  no  broadly 
marked  nationalities,  with  their  differences  of  language,  customs, 
religion,  and  of  arts,  are  found  out  of  their  natal  climates. 

The  spirit  of  conquest  and  of  commerce  carries  men  all  over  the 
world  and  across  the  geographic  zones  ;  but  colonization  closely 
follows  accustomed  temperatures  and  other  physical  conditions. 

The  barbarous  invaders  of  Rome  came  down  from  afar  in  the 
north,  northeast,  and  northwest,  traversing  five  degrees  or  more 
of  latitude  and  a  larger  range  of  climate,  into  what  we  call  a  more 
genial,  not  a  more  congenial,  region  ;  but  they  retired,  after  a 
temporary  sojourn,  into  their  natal  homes.  The  Saxons  could 
permanently  inhabit  England,  for  their  native  land  lay  in  the  same 
latitude  ;  and  the  Normans  had  only  to  cross  the  English  channel 
to  change  their  residence,  without  any  important  change  of  atmo- 
spheric conditions.  The  Moors  held  their  place  in  Spain  during 
half  a  dozen  centuries,  because  all  of  southern  Spain  lies  within 
the  isothermal  lines  which  bound  the  Mahometan  conquests  and 


THE    LAW    OF    MIGRATION,    ETC.  33 

settlements  from  the  shores  of  the  Mediterranean,  through  Arabia 
into  Persia  and  India.  Mexico  lies  in  the  same  belt  of  temperature 
as  southern  Spain,  and  Cuba  touches  its  borders.  The  Scandi- 
navians trace  their  origin  to  the  Himalaya  Mountains  of  Asia, 
having  a  climate  similar  to  that  of  northern  Europe. 

More  remarkable  than  these  instances  are  the  facts  of  immigra- 
tion in  our  own  country  and  time.  Here  the  law  of  climate  gov- 
erns colonization  and  migration  with  less  exception  or  less  variance 
of  operation,  I  think,  than  are  found  in  any  other  department  of 
vital  statistics.  Allow  me  to  refer  you  for  the  demonstration  to 
Dr.  Elder's  "Questions  ef  the  Day,"  page  331. 

P.  Let  me  interrupt — Does  the  thermometer  or  barometer,  or 
both,  give  the  scale  of  measurement  for  what  you  call  climatic  law  ? 
T.  By  climate  is  intended  heat,  moisture,  winds,  and  all  atmo- 
spheric forces  which 'mark  the  salubrity  of  the  region  to  be  occu- 
pied. Isothermal  lines  are  the  nearest  general  indications  of  all 
the  agencies  Avhich  affect  the  life,  health,  and  occupations  of  men  : 
but  let  me  caution  you  that  on  this  point  only  the  most  recent  maps 
are  reliable,  and  that  even  these  are  not  yet  exact  or  complete. 

D.  There  are  some  exceptions  to  the  rule,  but  I  suppose  you 
will  claim  that  they  prove  it. 

T.  No.  Exceptions  do  not  prove  a  rule,  but  on  the  contrary, 
so  far  as  they  go,  they  contradict  and  disprove  it.  Evidence  is 
testimony  to  the  truth,  the  whole  truth,  and  nothing  but  the  truth. 
That  saying  is  one  of  the  shabbiest  that  could  be  used  to  cover 
errors  of  speculation. 

Your  apparent  exceptions,  if  I  may  guess  at  them,  are  such  as 
the  world-wide  rule  of  Imperial  Rome.  But  I  answer  that  while 
she  held  so  many  diverse  regions  in  subjection,  she  inhabited  Italy 
only.  Military  posts  and  governmental  agents  were  all  that  con- 
stituted her  presence  either  north  or  south  of  her  own  belt  of  tem- 
perature. In  this  England  and  France  resemble  the  ancient 
mistress  of  Europe,  Africa,  and  Asia.  They  hold  all  their  foreign 
provinces  of  unlike  climate  by  their  armies  of  occupation  and 
officers  of  civil  government;  and  these  are  changed  in  personality 
at  very  brief  intervals.  There  were  not  so  many  as  fifty  thousand 
white  persjons  in  the  British  West  India  Islands  when  the  colored 
population  amounted  to  eight  hundred  thousand.     In  1861  the 


34  POLITICAL    ECONOMY. 

population  of  East  India  under  English  rule,  was  variously  esti- 
mated at  from  135  to  200  millions,  while  the  English  residents 
amounted  to  only  125,945  persons,  of  whom  84,083  went  to  com- 
pose the  British  officers  and  men  of  the  army  ;  22,550  were  men 
and  boys  in  the  civil  service,  and  the  whole  remainder  were  19,306 
women  of  European  origin. 

I).  This  law  so  proved,  with  the  apparent  exceptions  so  ex- 
plained, is  as  new  in  its  announcement  as  surprising  in  its  bearings. 

T.  Yes.  Even  its  discoverer,  Henry  C.  Carey,  was  not  aware 
of  it  until  after  he  had  published  the  last  volume  of  his  "  Social 
Science"  in  February,  1859.  Yet  its  -exposition  and  demonstra- 
tion, to  which  I  have  already  referred  you,  shows,  by  the  crucial 
test  of  its  application  to  the  United  States,  that  in  18G0  only  one 
person  in  every  fourteen  was  found  residing  and  sojourning  out- 
side of  their  nativities,  throughout  the  whole  range  of  our  im- 
mensely wide  domain,  while  it  was  freely  open  to  the  emigrants 
of  foreign  countries  and  of  the  earlier  settlements  of  the  Eastern 
and  Southern  States. 

Allow  me  to  think  and  say  that  the  doctrine  is  proved. 

P.  If  this  law  of  occupation  of  the  earth  be  true,  it  must 
also  be  true  that  the  broad  differences  in  scientific  attainments, 
religious  beliefs,  political  institutions,  and  even  the  kinds  of  lite- 
rature and  art  must,  as  they  arise  out  of  the  constitution  of  differ- 
ently endowed  peoples,  follow  and  conform  to  it.  Do  mental 
methods,  systems  of  morals  and  of  society,  the  fine  arts,  music, 
poetry,  and  the  drama,  attach  to  nativities  and  climates  with  a 
conforming  persistency  ? 

T.  I  don't  happen  to  be  an  encyclopedia  of  history,  arts,  and 
sciences,  but  if  the  proportions  of  a  Hercules  may  be  safely 
inferred  from  the  size  of  his  foot,  as  one  of  the  canons  of  criticism 
bus  it  (  Ex  pede  Herculem),  I  may  be  allowed  to  believe  in  its 
consonance  with  all  that  I  do  know  within  the  province  of  its  juris- 
diction. I  feel  at  liberty  to  say  that  the  popular  and  the  authori- 
tative notion  of  cosmopolitanism  is  opposed  to  providential  law  ; 
that  its  doctrine  is  absurd,  and  its  endeavored  reduction  into  prac- 
tical results  is  a  mistake  and  must  prove  a  failure. 

I).  Mr.  Seward  is  responsible  for  the  announcement  of  an  irre- 
pressible conllict  between  the  North  and  the  South  of  our  Union. 
What  say  you  to  its  necessary  existence  ? 


THE    LAW    OF    MIGRATION,    ETC.  35 

T.  Mr.  Seward  affirmed  only  an  irrepressible  conflict  between 
chattel  slavery  and  republican  liberty,  but  this  arises  probably  out 
of  causes  more  permanent  in  their  nature  and  power  than  the 
incident  of  the  rights  of  persons  under  political  government. 
More  to  the  point  and  bearing  of  our  theme  is  the  view  of  Alex- 
ander Hamilton,  as  it  is  given  in  the  Federalist.  He  held  that  a 
division  of  the  States,  upon  failure  to  adopt  the  Federal  Constitu- 
tion, would  strike  an  east  and  west  line,  making  a  solid  South  and 
a  solid  North  in  political  organizations  at  its  outset,  which  has 
since  been  nearly  effected,  and  still  threatens  our  national  in- 
tegrity. This  was  prophecy,  and  it  is  in  the  possibilities  of  his- 
tory. Division,  once  begun,  may  go  further,  and  give  us  a  South- 
ern, a  Middle,  and  a  Northern  nationality,  with  the  centre  of  the 
latter  upon  the  St.  Lawrence,  and  the  other  portion  in  Canada.  I 
cannot  infer  a  Western  division,  separated  from  the  East,  in  the 
same  belt  of  temperature,  because  the  Rocky  Mountains  are  not 
now  natural  divisions  as  in  the  olden  times,  before  railroads  and 
the  telegraph  obliterated  such  natural  impediments  to  union  and 
commerce  between  peoples  naturally  allied. 

D.  Is  there,  then,  such  danger  of  secession  in  the  natural  law 
and  constitution  of  things  ? 

T.  The  natural  laws  are  ever  operative,  but  subject  to  modifi- 
cation, so  far  as  voluntary  agreements  or  conventions  can  effect- 
ively work  under  them.  The  aggregations  of  political  States  ac- 
cording to  nationalities,  and  the  severances  of  territorial  domin- 
ions, forced  by  the  craft  of  statesmanship  and  the  mastery  of  arms, 
which  are  now  going  on  in  Europe,  must  go  on  until  providential 
adjustments  shall  be  realized  ;  until  the  most  general  order  of 
the  right  man  in  the  right  place  shall  be  settled.  In  the  mean 
time  Federal  unions  will  grow  as  they  are  now  growing  into  use, 
in  which  the  severalties  of  every  people  shall  be  respected  and 
secured,  and  thus  a  general  harmony  will  be  attained.  Differ- 
ences are  not  a  ground  of  war.  Diversity  of  parU,  held  in  their 
proper  relations,  make  up  the  most  perfect  organisms.  The 
compromises  of  our  Federal  Constitution  are  its  irregularities  in 
operation.  There  are  no  compromises  in  the  man — the  model  of 
society.  All  his  functions  are  held  in  harmony  by  the  adjust- 
ments of  justice  to  the  best  uses  and  the  greatest  freedom  of  every 
or<ran  in  the  general  frame. 


36  POLITICAL    ECONOMY. 

The  relation  of  man  to  land  is  significantly  expressed  by  the 
"•ood  old  Saxon  word  Husbandman — a  child  of  earth  destined  to 
be  its  lord  ;  a  ruler,  but  not  arbitrary  ;  a  representative,  as  well 
as  governor  :  his  own  conditions  a  reflex  of  the  conditions  which 
he  controls. 

D.  To  what  issues  do  these  abstractions  tend  ? 

T.  They  are  the  elements  of  man's  terrestrial  welfare.  They 
are  the  outline  chalk-marks  of  the  picture  to  be  painted.  The 
globe,  with  its  atmospheric  auxiliaries,  as  he  finds  it,  is  only  an 
assemblage  of  possibilities,  latent  forces,  put  at  his  disposal  under 
the  laws  inherent  in  them. 

P.  I  understood  that,  in  the  study  of  wealth,  we  must  begin 
with  the  sources  of  our  supplies — land  and  labor — land  as  the 
material,  and  labor  as  the  efficient  producer  of  things  in  forms  for 
use. 

T.  At  the  very  first  step  of  the  discussion  we  must  either 
stumble  over  or  remove  the  theoretic  obstacles  which  the  political 
economists  in  vogue  have  thrust  into  our  pathway.  Malthus  and 
his  followers  teach  that  "  the  one  great  cause  that  has  hitherto 
impeded  the  progress  of  mankind  toward  happiness — that  one 
which  has  caused  the  existing  inequality  in  the  distribution  of  the 
bounties  of  nature — is  the  constant  tendency  in  all  animated  life 
to  increase  beyond  tlie  )i<>uri$hnent  prepared  for  if."  PREPARED 
for  it !  What  do  these  grumblers  mean  ?  Is  there  any  lack  in 
the  stock  of  materials  capable  of  assuming  the  forms  required  for 
human  service  ?  Are  the  mineral  ores,  the  fossil  coal,  the  stores 
of  natural  fertilizers,  exhausted  ?  Have  sun-heat,  electricity,  and 
the  treasures  of  rain  and  dew  given  out?  Has  the  whole  surface 
soil  of  the  wide  earth  been  emptied  of  its  vitality,  or  ever  been 
tasked  up  to  its  capabilities  anywhere  ?  Have  the  productive 
capabilities  of  the  inferior  animals  failed  to  yield  their  tribute  to 
our  sustenance  and  service  ?  Oh  !  the  materials  only  are  fur- 
nished, but  the  feast  has  not  been  prepared  ;  and  how  could  the 
Creator  declare,  when  reviewing  his  week's  work,  iC  It  is  very 
good,"  when  it  was  prepared  and  good  only  for  the  herb  of  the 
field,  the  beasts  of  the  earth,  the  fowls  of  the  air,  and  the  fishes 
of  the  sea  ;  while  man,  for  whom  all  these  creatures  were  made, 
was  left  to  dependence  upon  his  own  industry  for  the  means  of  his 


THE    LAW    OF    MIGRATION,    ETC.  37 

support, — to  earn,  "  in  the  sweat  of  his  face,"  the  means  and  sup- 
plies of  his  animal  life  ?  Ah,  luckless  wight,— ah,  heavy  lot ! 
"  Behold  the  fowls  of  the  air  :  they  sow  not,  neither  do  they  reap, 
nor  gather  into  hams,  yet  your  heavenly  Father  feedeth  them. 
Consider  the  lilies  of  the  field,  how  they  grow  ;  they  toil  not, 
neither  do  they  spin,  yet  Solomon  in  all  his  glory  was  not  arrayed 
like  one  of  these."  (Matthew  vi.  28.)  Was  man  made  only  a  little 
lower  than  the  angels,  and  not  so  well  prepared  for  as  the  beasts 
that  perish  ? 

I).  Interpreting  the  actual  and  true  report  of  man's  earthly 
history  into  a  complaint,  by  the  narrators,  against  the  dealings  of 
Providence,  you  treat  it  with,  a  bitter  irony,  but,  in  fact,  food- 
famines  crowd  the  chronological  tables  of  remarkable  events. 
They  recur  in  frightful  frequency,  accompanied  with  plague  and 
pestilence. 

T.  They  never  happen  except  in  exclusively  agricultural  coun- 
tries, and  where  the  agriculture  is  never  any  better  than  a  system 
of  land-robbery.  The  soil  is  not  only  a  machine  requiring  treat- 
ment conforming  to  its  properties,  but  it  is  also  a  bank  of  issue 
and  deposit.  The  shareholder  may  draw  upon  it  to  the  extent  of 
his  stock  or  the  principal,  but,  when  he  becomes  a  borrower,  his 
deposits  must  be  kept  even  with  his  drafts.  It  honors  no  over- 
drafts . 

Famines- are  never  universal,  nor  even  prevalent  over  consider- 
able extents  of  territory.  Food  was  abundant  in  Egypt  when 
Israel  was  starving.  Grain  is  often  rotting  unused  in  the  neigh- 
borhood of  regions  that  are  in  destitution.  Mark,  learn,  and 
inwardly  digest  the  ordinance  of  Providence  that  has  made  the 
whole  variety  of  men's  industries  interdependent ;  intending 
thereby  a  well-balanced  employment  of  all  their  faculties  and  of 
their  diverse  agencies  in  the  maintenance  of  social  relations,  in 
order  that  the  many  members  of  the  grand  man,  or  community, 
may  work  together  in  harmony,  so  that  "the  eye  cannot  say  to  the 
hand,  I  have  no  need  of  thee  :  nor  again  the  head  to  the  feet,  I 
have  no  need  of  you."  (1  Corinth,  xii.  21.)  The  productive 
industries  which  are  not  under  the  skyey  influences  provide  for 
the  casual  deficiencies  of  agriculture.  When  you  can  point  to  a 
case  of  famine  in  any  country  of  diversified  industries  you  will 


38  POLITICAL    ECONOMY. 

have  an  instance  calling  for  an  extraordinary  explanation.  An 
island,  or  a  district,  depending  for  food  upon  a  single  root,  and 
having  no  pursuits  that  supply  the  means  of  purchase,  may  starve 
in  a  had  year  ;  hut  what  is  this  against  the  bountifulness  of  pro- 
vision in  a  system  of  adjustment  of  means  to  ends?  You  may 
not  believe  in  Edenism,  the  golden  age,  and  the  fall  of  man,  but 
the  manifest  misgovernment  of  the  earth,  socially  and  industrially, 
must  be  considered  in  explanation  of  its  catastrophes. 

D.  But  there  is  an  unhappy  disproportion  of  food  products  to 
demand  in  England  itself,  highly  cultivated  as  it  is,  notwithstand- 
ing its  large  diversification  of  industries.  The  pressure  of  its 
population  upon  sustenance,  even  if  only  occasional,  makes  a  hitch 
in  the  even  run  of  your  theory. 

T.  But  not  in  the  proper  effect  of  a  complete  variety  of  employ- 
ments. The  matter  of  wages  or  earnings  is  the  great  factor  in  the 
fortunes  of  all  that  live  by  food  and  do  not  produce  it.  But,  the 
direct  and  immediate  relations  of  man  to  land  are  the  subjects 
now  in  hand  ;  and  accidents,  incident  to  existing  disorders,  must 
be  postponed  till  they  can  be  treated  in  their  proper  place.  The 
possible  sufficiency  of  supplies  for  all  the  wants  of  life,  conditioned 
upon  the  proper  management  of  the  great  machine,  presents  itself 
first  for  consideration. 

Admitting  that  agricultural  products  differ  from  those  which  are 
usually  styled  manufactures  in  this,  that  they  are  not  capable  of 
an  equally  indefinite  increase  by  any  possible  means  applied ;  and, 
admitting  that  mechanical  forces  have  a  larger  range  of  converting 
power  over  dead  matter  than  cultivation  has  over  the  vital  proper- 
ties of  the  soil,  the  limited  demand  for  food  may  be  met  fairly  by 
such  limited  capability  of  supply.  Sufficiency,  not  infinity,  is  all 
that  is  required. 

It  is  held,  however,  that  because  arable  land  has  measurable 
limits  of  extent,  and  also  of  fertility,  and,  that  in  some  cases  and 
places  the  utmost  of  its  capabilities  have  been  reached,  while  the 
apparent  or  prospective  demand  for  its  supplies  is  theoretically 
unlimited:  let  me  answer  this  partial  inadequacy  by  suggest- 
ing that  the  world  is  bigger  than  the  biggest:  barnyard.  The 
poulti'3^,  with  their  wings  clipped,  may  scare  at  a  threatened  scar- 
city of  food  while  their  mouths  are  multiplying  a  dozen  times  at 


THE   LAW    OF   MIGRATION,    ETC.  39 

every  hatching.  Domesticated  fowls,  with  their  prospects  bound- 
ed by  their  yard  fences,  have  no  prevision  of  the  granaries  of 
Providence. 

D.  The  Reverend  T.  Malthus,  David  Ricardo,  J.  Stuart  Mill, 
and  J.  R.  McCulloch  have  been  domesticated,  indeed,  but  without 
losing  their  strength  and  skill  of  wing ;  they  have  become  house- 
hold pets  wherever  their  works  are  studied,  and  their  cluck  and 
crow  are  familiar  throughout  Christendom. 

T.  For  the  present ;  but,  for  the  future  !  "  that  is  as  hereafter 
may  be."  Hold  the  fort  bravely  while  your  ammunition  and  pro- 
visions last,  and  die  in  the  last  ditch,  as  becomes  a  partisan.  In 
the  mean  time  let  us  be  no  respecter  of  persons,  only  grateful  for 
the  services  they  render  us,  and  as  respectful  as  allows  us  our  own 
liberty  of  thought. 

To  resume  the  dispassionate  investigation  of  our  subject. 
The  limit  of  productiveness  of  the  soil  has,  apparently,  been 
reached  in  Belgium,  in  some  localities  in  England,  and  in  the  im- 
mediate neighborhood  of  the  largest  cities  in  America.  Usually 
land  is  in  service  in  the  temperate  zones  not  more  than  two,  three, 
four,  or  five  months  in  the  year.  In  some  special  places  it  is  made 
to  produce  three  crops  in  the  season.  And  here  and  there  gardeners 
and  fruit-growers  draw  from  an  acre  four  or  five  hundred  dollars' 
work  of  product.  We  have  authority  for  saying  that  some  seeds 
yield  thirty,  some  sixty,  and  some  one  hundredfold.  The  miracu- 
lous multiplication  of  the  loaves  in  the  wilderness  is  cleverly  ap- 
proached in  the  agricultural  art  and  industry  of  China,  and  Japan. 
These  results  prove  the  latent  capabilities  of  the  very  least  pro- 
ductive soils  similarly  situated. 

P.  I  have  heard  our  general  system  of  rural  management  called 
scratchiculture,  and  our  treatment  of  the  soil,  scalping  it, — terms 
that,  I  believe,  pretty  fairly  describe  both  the  indolent  inefficiency 
and  the  savage  violence  with  which  our  virgin  soils  are  generally 
treated  ;  and  it  seems  to  me  that  a  theory  of  things  as  they  are  is 
not  a  philosophy  of  natural  law. 

T.  It  is  safe  to  say  that  all  of  Great  Britain,  Italy,  Belgium, 
and  France,  that  has  pushed  the  possible  fertility  of  their  lands  to 
their  utmost,  is  not  more  than  equal  to  the  area  of  Pennsylvania, 
which  measures  46,000  square  miles,  or  24 \  millions  of  acres. 


40  POLITICAL    ECONOMY. 

Now  Pennsylvania  has  but  1J  per  cent,  of  the  territory  of  the 
United  States,  and  the  fully  cultivated  lands  of  the  European 
countries  named  are  equal  to  only  the  one  sixty-sixth  of  the  terri- 
tory of  this  Union. 

The  proportion  of  the  arable  lands,  -which  are  under  any  kind 
of  cultivation,  is  a  very  small  fraction  of  the  quantity  still  waiting 
for  the  plough  ;  and  remember,  that  those  usually  called  arable, 
in  no  case  embrace  the  best  of  all, — the  marshes,  swamps,  and 
other  waste  lands  that  stand  unavailable  till  abundance  of  labor- 
power,  natural  and  artificial,  and  adequate  capital,  shall  be  ap- 
plied to  their  subjugation.  It  would  not  be  extravagant  to  esti- 
mate the  food-producing  power,  lying  within  the  prospective 
domain  of  culture,  at  ten  times  the  amount  as  yet  put  to  duty  ; 
and  that  not  a  fourth  of  the  potential  fertility  of  those  already 
appropriated  and  worked  has  ever  been  extracted  from  them  ;  and 
that  not  a  man  that  has  ever  been  starved  or  stinted  but  could 
have  been  abundantly  supplied  by  the  surplus  elsewhere  produced, 
wasted  and  perverted  from  its  proper  use.  It  may  be  conceded 
to  the  pessimist  theorists  that  the  resources  of  sustenance  from  the 
soil,  as  from  the  seas,  are  neither  unlimited  in  substance  nor  service 
for  human  use.  The  same  thing  might  be  said  of  sunshine  and 
rain  ;  but  if  there  is  enough  of  these  in  store  capable  of  appro- 
priation, if  the  thousand  millions  of  men  upon  the  globe  have  not 
yet  conquered  10  per  cent,  of  its  surface,  or  so  much  as  1  per 
cent,  of  its  capabilities  of  service,  it  is  of  no  moment  that  a  few 
garden  spots,  which  could  be  covered  by  a  lady's  thimble  on  a 
medium  sized  map  of  the  world,  have  been  pressed  to  their  utmost 
productiveness. 

P.  If  not  irrelevant  at  this  stage  of  our  inquiries,  I  should  like 
to  know  so  much  of  the  statistics  of  agriculture  as  are  the  proper 
data  of  its  doctrines.  One  needs  the  facts  and  figures  for  conclu- 
sions so  general  as  those  which  you  invite  us  to  accept. 

T.  Having  postulated  the  sufficiency  of  the  earth  for  the  sup- 
port of  all  its  possible  inhabitants,  experience,  rightly  understood, 
is  competent  testimony,  and  1  proceed  to  adduce  it:  — 

England,  which  may  be  taken  in  the  average  and  in  the  whole 
to  be  better  cultivated  than  the  other  parts  of  the  United  King- 
dom, has  an  area  of  32|  millions  of  acres  ;   27  millions,  including 


THE    LAW    OF    MIGRATION,    ETC.  41 

meadow  and  pasturage,  are  under  tillage  ;  2  millions  of  the  pres- 
ently arable  are  uncultivated  ;  and  3  millions  are  moor  and  moun- 
tain, regarded  as  waste  lands.  Of  these  lands,  those  in  the  best 
condition  are  stated  to  produce  about  46  bushels  of  wheat  per 
acre,  and,  of  course,  a  more  than  equivalent  yield  of  roots,  fruits, 
and  other  nutritious  vegetables  ;  for  while  grains,  that  grow  above 
the  surface  of  the  soil  in  their  greatest  fruitfulness,  are  measur- 
able by  the  bushel,  the  roots  of  the  subsoil  are  as  tons  in  weight 
or  quantity.  I  have  known  one  acre  to  produce  two  hundred  and 
thirty  dollars'  worth  of  carrots  and  cabbages,  against  sixty  dollars' 
worth  of  wheat,  which,  at  the  utmost,  it  would  have  yielded  in  the 
same  market.  I  leave  you  to  cipher  out  the  relative  value  and 
service  derived  from  these  varied  kinds  of  productions,  and  to  strike 
the  average  of  a  due  admixture  of  them. 

Suppose  only  three  and  a  half  millions  of  acres  of  English  land 
were  made  to  yield  but  thirty  bushels  of  wheat  to  the  acre,  the 
product  would  be  a  hundred  and  five  millions  of  bushels,  or  say, 
five  bushels  per  head  of  the  population.  (This  is  the  average 
consumption  of  that  grain  in  the  United  States.)  This  proposition 
leaves  twenty-nine  millions  of  acres  for  all  other  vegetable  pro- 
ductions, among  which  roots,  fruits,  and  other  edible  vegetables 
yield  three  or  four  times  more  of  sustenance  than  does  the  wheat 
grown  for  bread.  Is  it  not  clear  that  the  lands  of  England  are 
capable  of  yielding  an  ample  subsistence,  under  high  cultivation, 
for  all  their  human  and  animal  occupants  ? 

D.  But  England  in  fact  imports  at  least  one-fourth  of  her  food 
supplies. 

T.  We  are  examining  the  capability  of  her  lands,  not  the  actual 
employment  of  them.  Her  misgovernment  of  her  territory  and 
tenantry  has  already  introduced,  and  will  end  in  a  complete  revo- 
lution of  her  monstrous  abuses  in  the  system  of  her  government. 
Her  conservatism  is  now  rapidly  running  into  a  radicalism  the 
most  portentous  that  the  civilized  world  has  ever  witnessed ;  Law 
and  landlordism  have  gone  so  far  into  extremes  of  abuse  that  the 
fundamental  doctrine  of  property — "  every  man  has  a  right  to  do 
as  he  will  with  his  own" — is  about  to  be  overturned.  Her  theory 
and  practice  of  political  economy  are  the  worst  in  all  Christendom, 
and  her  example  is  no  longer  even  quotable,  much  less  directory 
4 

V*"   0B"  THE  ""* 


42  POLITICAL    ECONOMY. 

in  the  production  and  distribution  of  wealth.  But,  directly  to  our 
subject.  Fiance,  whose  political  government  is  a  rapid  round  of 
revolutions,  has  a  stable  economical  system  which  is  maintained 
through  all  changes  of  civil  rulers  ;  yet  she  not  only  feeds  herself 
with  all  things  except  tropical  products,  but  exports  food  in  im- 
mense quantities.  For  instances  of  her  abundance  :  In  the  year 
1821  her  agriculture  yielded  five  and  a  half  bushels  of  wheat  per 
head  of  her  aggregate  population.  In  1857  it  had  risen  to  eight 
and  a  half  bushels,  or  three  and  a  half  bushels  more  per  capita 
than  we  consumed.  She  produces  twice  our  quantity  of  potatoes ; 
her  beet-root  sugar  is  more  than  seven  pounds  per  head — in  a 
word  she  is  in  all  things,  except  such  as  her  climate  refuses,  self- 
supporting.  And  her  available  means  for  meeting  the  enormous 
expenses  of  domestic  and  foreign  Avars  are  a  world's  wonder  to-day. 

I  presume  that  I  need  not  speak  in  reference  to  our  own  coun- 
try— of  its  capabilities  for  the  maintenance  of  its  inhabitants, 
present  and  prospective. 

I  may,  if  need  be,  when  you  are  at  leisure  for  the  examination, 
furnish  you  with  statistical  tables  of  food  production  and  supply 
of  requirement,  that  will  sustain  the  very  boldest  calculation  and 
prediction  of  sufficiency,  and  of  a  constant  increase  of  subsistence 
of  all  kinds,  far  in  excess  of  the  growth  or  requirement — supply 
actually  in  excess  of  demand.  Verily  "  He  givetb  to  all  good 
measure,  pressed  down,  shaken  together,  and  running  over." 

D.  You  insist  upon  sufficiency,  but  the  term  is  by  its  own  force 
relative  to  demand,  and,  is  it  not  true  that  the  number  of  mankind 
grows  in  a  geometrical  ratio,  while  food,  under  the  most  rapid 
practical  improvement,  increases  only  at  an  arithmetical  rate  ;  that 
is,  after  the  formulae  of  Mai  thus,  the  human  race  is  capable  of 
multiplying  one  hundred  and  twenty-eight  times  in  the  eight  quar- 
ters of  two  centuries,  while  agricultural  products  are  not  possible 
more  than  eight  times? 

T.  A  direct  consequence  of  this  assumed  rate  of  fecundity  is 
that,  if  all  that  are  born  should  live  to  threescore  and  ten.,  there 
would  soon  be  no  standing  room  left  for  the  race  on  the  face  of 
the  habitable  earth  ;  but,  as  you  say,  sustenance  is  relative,  and, 
therefore,  the  tendency  to  such  a  catastrophe  may  be  found  not  in 
the  provision  for  subsistence,  but  in  a  disproportioned  production 


THE    LAW    OF    MIGRATION,   ETC.  43 

of  life.  Malthus  assumed  a  constant  quantity  in  the  increase  of 
population,  and  fixed  the  rate  at  the  highest  possible  figure  for  its 
measure.  But,  that  it  is  variable  and  not  constant  is  one  of  the 
plainest  facts  of  experience  and  observation.  This  matter  must 
be  postponed  to  its  appropriate  place  in  our  study.  Then  we  can 
inquire  whether  an  excess  of  life  occurs  under  the  order  of  nature, 
requiring  the  remedy  of  premature  death  for  the  apparent  blunder 
in  the  Divine  appointment  of  means  to  their  ends,  or  whether  the 
bills  of  mortality  rightly  suggest  a  departure  from,  and  an  abuse 
of,  the  intended  agency  of  man  in  the  exercise  of  his  functions. 
There  is,  indeed,  much  suffering  in  the  life  that  now  is,  past,  pre- 
sent, and  in  -the  immediate  future  ;  but  I  suppose  not  more  suffer- 
ing than  sin,  which  is  violation  of  law.  I  cannot  even  imagine  a 
system  of  existence  in  which  wrong  shall  get  along  as  well  as  right. 
We  are  looking  for  the  law  of  the  subject. 

D.  But  the  facts  of  history  in  all  times  and  places — do  they 
not  support  the  teachings  of  what  you  are  pleased  to  call  the  dis- 
mal school  of  the  economists  ? 

T.  So  far  as  they  can  support  anything  they  do.  But  allow 
me  to  object  that  the  disorders  of  misgovernment,  the  ill  distribu- 
tion of  the  products  of  industry,  the  follies  and  crimes  of  ignorance 
and  lawlessness,  the  potato-rot  in  Ireland,  the  cholera  in  Asia,  the 
grasshopper  plague  in  Wisconsin,  the  cotton  worm  in  South  Caro- 
lina, and  the  never  ceasing  emigration  from  Europe,  are  the  pud- 
dles from  which  these  philosophers  drag  up  their  data  and  fabricate 
their  theory — grounds  about  as  good  for  a  system  of  providential 
laws,  as  a  street  riot  affords  for  a  philosophy  of  societary  organi- 
zation in  conformity  to  nature  and  order.  How  these  interpreters 
of  the  mysteries  philosophize  upon  the  facts  which  disorder 
supplies ! 

D.  Your  theory  is  probably  calculated  for  the  millennium. 

T.  It  is  predicated  of  the  harmonies  of  nature,  used  as  a 
straight-edge  for  detection  of  the  departures  of  human  conduct 
from  the'  order  to  which  man  and  his  circumstances  are  made 
responsible.  I  would  have  a  standard  of  abiding  truths,  not  a 
jumble  of  accidents  and  errors,  for  a  science  of  life.  A  standard 
is  an  aim,  a  rule  of  criticism,  a  directory  for  amendment.  It  is 
not  a  justification  of  evils,  and  cannot  be  made  a  warranty  of 


44  POLITICAL   ECONOMY. 

opinion  and  conduct  until  "  whatever  is  is  right."  The  changes 
which  are  improvements  of  the  past  are  well  approved  hy  their 
effects,  and  the  improvement  of  the  future  under  direction  of  the 
absolute  best  may  be  allowed,  even  if  it  does  keep  an  eye  on  the 
millennium,  as  a  wanderer  in  the  dark  takes  the  stars  for  his  guide. 
P.  Do  you  find  a  constantly  growing  stock  of  food  supplies 
both  in  England  and  France? 

T.  In  England,  to-day,  land  yields  fully  five  times  more  than 
in  the  time  of  Henry  the  Eighth.  Elizabeth's  maids  of  honor 
were  regaled  upon  beef  and  beer  ;  vegetables  and  cultivated  fruits 
were  imported  rarities.  The  wild  boar's  head  was  the  crown  of 
the  franklin's  feast ;  and  the  sirloin  of  beef  took  the  honor  of 
knighthood  at  the  nobleman's  table.  Wines  of  foreign  production 
abounded  in  the  carousals  of  the  wealthy,  when  a  shirt,  clean  or 
otherwise,  was  not  in  the  toilet  of  the  most  luxurious.  The  six- 
teen quarterings  upon  the  shields  of  the  descendants  of  the  Norman 
conquerors  are  just  as  true  measures  of  the  increased  productive- 
ness of  these  landed  estates  as  of  their  rank  in  the  records  of  the 
herald's  office.  These  landlords,  or  lords  of  the  land,  grew  with 
the  growth  of  the  soil  they  were  originally  made  of.  The  cor- 
respondence is  a  fixed  law.  Increase  in  the  conditions  of  man 
tallies,  step  by  step,  with  those  of  the  earth  he  sprang  from  and 
lives  on.  The  real  wealth  of  a  people  is  indicated  by  the  value 
of  their  fixed  property,  not  by  that  of  their  movables,  for  the  sov- 
ereignty of  the  soil  is  measured  by  its  improvement,  or  its  sub- 
jection under  the  conditions  of  the  great  charter  recorded  in 
Genesis,  chap.  i.  v.  28. 

The  land  over  which  the  savage  roams  is  not  a  subject  of  owner- 
ship ;  it  is  not  a  property,  but  a  temporary  use,  such  as  it  is  to 
the  beasts  and  birds.  His  wealth  is  all  in  personal  and  movable 
croods.  The  measure  of  the  wealth  of  every  nation,  of  every  State 
in  this  Union,  and  of  every  district  in  it,  is  found  in  the  prepon- 
derance of  its  real-estate  value  over  its  personal  property. 

P.  Will  this  rule  of  estimation  hold  in  particulars  and  in  de- 
tail, as  well  as  in  the  general,  which  seems  to  me  well  supported 
by  the  reason  of  the  thing?  Real  estate  is  a  permanency;  per- 
sonal is  evanescent,  consumed  in  its  intended  use,  and  its  value  is 
a  matter  of  conventional  estimate. 


THE    LAW    OF    MIGRATION,    ETC.  45 

T.  For  an  instance  which  fairly  covers  the  general  application 
of  the  rule:  In  18(30  the  total  census  valuation  of  the  rebel  States 
was  $2,289,029,642,  of  which  $842,927,400  was  in  slaves,— more 
than  one-third  of  the  total  amount.  The  real  estate  of  those 
States,  as  estimated  by  the  marshals,  was  then  43  per  cent.  ;  and 
the  personal  of  all  kinds  was  57  per  cent,  of  their  property.  At 
the  same  time  the  average  of  real  to  personal  estate  in  Pennsyl- 
vania, New  York,  and  Massachusetts  was  75  per  cent,  of  their 
total  valuation.  South  Carolina,  Georgia,  and  North  Carolina 
had  but  30  per  cent,  in  real  estate,  against  70  in  personal.  The 
proportion  of  real  or  fixed  property  in  exchange  value  to  its  float- 
ing capital  is  the  true  measure  of  a  nation's  wealth  and  of  its 
grade  in  civilization. 

P.  I  see  that  this  rule  holds  in  the  estimate  of  the  aggregate 
money-worth  of  a  nation's  property,  but  the  welfare  of  a  people 
must  depend  upon  the  distribution  of  productive  capital  ;  and,  in 
consequence,  the  permanency  and  availableness  of  the  aggregate 
to  the  general  welfare.  How  do  France  and  England  compare  in 
this  respect  ? 

T.  In  England  the  lands  are  being  concentrated  in  the  hands 
of  a  constantly  decreasing  number  of  proprietors.  In  1688  there 
were  840,000  landholders.  Adam  Smith  puts  the  number  in  1776 
at  200,000.  In  1822  they  were  reported  at  32,000  ;  in  1861, 
30,766.  To-day  100  persons  own  4,000,000  acres.  In  keeping 
with  this  monopoly  in  England  12  persons  own  one-quarter  of 
Scotland,  and  744  own  more  than  one-half  of  the  soil  of  Ireland. 
Such  an  allotment  must  be  disastrous  to  the  mass  of  society,  and 
so,  essentially  to  the  few,  who  at  last  depend  for  their  prosperity 
upon  the  general  welfare  of  the  community. 

France  is  governed  by  a  different  policy,  with  a  corresponding 
difference  of  results.  Her  lands  are,  for  the  most  part,  divided 
in  ownership  to  the  last  possible  extent.  The  law  of  March,  1793, 
conforming  to  this  tendency,  contributed  to  its  prevalence  by  abol- 
ishing testamentary  freedom,  obliging  parents  to  make  an  equal 
division  of  their  landed  property  among  their  children.  The  result 
is  that  the  present  proprietor  of  his  acre  or  two  is  a  husbandman ; 
he  is  wedded  for  life  to  the  soil,  and  cultivates  it  as  ownership  only 
can  induce.     He  does  not  emigrate  ;  he  is  not  a  tenant  at  will  of 


46  POLITICAL   ECONOMY. 

the  field,  nor  a  nuisance  in  the  highway.  He  views  every  inch 
of  his  little  domain  with  the  affection  which  the  smaller  properties 
always  inspire  ;  and  he  is,  in  the  language  of  Adam  Smith,  "the 
most  industrious,  the  most  intelligent,  and  the  most  successful  of 
all  improvers." 

An  English  authority,  comparing  the  respective  tendencies  of 
these  different  land  policies,  says  :  "  English  laborers,  at  the  best, 
save  not  more  than  one-fifth  of  their  earnings  ;  hut  the  economy 
of  the  corresponding  French  laborers  saves  four-fifths."  It  is  the 
intended  investment  in  land  that  incites  them  to  the  utmost  pru- 
dence in  expenditure,  which,  while  it  brings  him  a  little  wealth  of 
independence,  takes  as  good  care  of  his  morals. 

P.  If  such  are  the  results  to  the  individuals,  the  constituents 
of  the  community,  they  must  appear  in  the  common  wealth. 

T.  The  ability  of  France  to  pay  and  provide  for  the  payment 
of  above  1800  millions  of  dollars  of  debt  in  less  than  three  years 
after  the  most  costly  and  destructive  war  in  modern  history — em- 
bracing the  German  indemnity,  with  the  added  current  expenses 
of  the  war,  foreign  and  communal  — indicates  greater  strength 
than  England  could  have  commanded  in  present  payment  from  all 
her  resources.  Of  all  the  nations,  the  United  States  alone  have 
met  an  equal  pressure  upon  their  resources  with  equal  success. 

When,  in  1854  and  1855,  Louis  Napoleon  turned  from  the 
bankers  and  millionaires  to  the  common  people  for  the  immense 
loans  which  he  required,  he  was  offered  three  times  the  amount 
called  for.  The  subscriptions  of  the  people  residing  outside  of 
Paris  in  a  single  twelvemonth  amounted  to  8429,800,000  more 
than  the  amount  asked  for, — 43  per  cent,  beyond  the  demand. 

P.  I  notice  that  you  have  said  nothing  about  the  progress  of 
agriculture  in  the  United  States  ? 

T.  The  progress  or  movement  has  been  so  irregular  here,  and 
the  extended  cultivation  of  the  new  lands  of  the  great  West  has 
so  confused  the  meaning  of  the  general  reported  results,  that  the 
capabilities  of  the  soil  under  improvement  are  not  clear  enough  for 
the  purpose  of  inquiry.  Moreover,  our  vast  inheritance  in  land. 
in  its  fresh  fertility,  has  hitherto  worked  effects,  such  as  enormous 
estates  usually  do  when  they  descend  to  prodigal  heirs,  who  can 
neither  see  nor  fear  an  end  to  them. 


THE    LAW    OF    MIGRATION,   ETC.  47 

> 

Our  history  of  agriculture  is  one  of  superabundance  under 
wastefulness.  The  aggregate  income  has  happily  covered  the 
extent  of  the  destruction  ;  but  in  the  test  cases  it  is  confirmatory, 
both  negatively  and  affirmativel}?-,  of  the  doctrine  we  are  main- 
taining. The  history  of  the  worst  indirectly  supports  the  infer- 
ences from  the  best.  The  consequences  of  the  violation  that  rules 
in  the  relation  of  man  to  land  are  found  in  such  statements  of  fact 
as  are  here  given  :  — 

Silas  Wright,  Governor  of  New  York,  said,  in  18-18,  that  before 
the  Revolution  of  1776,  twenty  to  thirty  bushels  of  wheat  was  the 
common  crop  in  the  county  of  Albany,  and  that  it  had  then  fallen 
off  to  twelve.  The  Plough,  Loom,  and  Anvil,  an  ably  edited 
agricultural  paper,  supports  this  statement,  saying,  in  1848, 
"  The  yield  of  wheat  per  acre,  twenty  years  ago,  in  the  State  of 
New  York,  averaged  twenty  bushels,  but  has  declined  to  twelve  ; 
and  that,  in  the  comparatively  new  State  of  Ohio,  the  average 
had  been  twenty  bushels,  but  had  fallen  in  twenty  years  to  ten  or 
twelve.  Governor  Wright  also  said  that,  in  1798,  the  Indian  corn 
crop,  which  was  as  high  in  New  York  as  one  hundred  and  twenty 
bushels  to  the  acre,  had,  in  fifty  years,  fallen  to  twenty-five.  So 
much  for  "the  indestructible  powers  of  the  soil"  of  the  econo- 
mists of  the  school  in  vogue. 

Governor  Wise,  in  an  address  to  the  people  of  Virginia,  a  little 
while  before  the  outbreak  of  the  great  rebellion,  described  the 
agriculture  of  the  State  as  scratchiculture  and  land-butcherino;  in 
this  style  :  "  Your  inattention  to  your  only  source  of  wealth  has 
seared  the  bosom  of  mother  earth.  Instead  of  having  cattle  to 
feed  upon  your  thousand  hills,  you  have  to  chase  the  stump-tailed 
steer  through  the  sedge-patches  to  procure  a  single  beefsteak. 
The  landlord  has  skinned  the  tenant,  and  the  tenant  has  skinned 
the  land,  until  all  have  grown  poor  together." 

Our  agriculture  is  a  subject  for  pathological,  not  for  physio- 
logical, science.  The  better  examples  are  found  only  where  land 
has  been  properly  treated. 

I) .  YTou  make  the  great  productive  machine  cost  extravagantly 
in  working  expenses  and  repairs  to  afford  the  chosen  examples  of 
its  highest  product.  Is  not  the  required  investment  quite  beyond 
the  means  of  the  ordinary  and  average  farmer  ? 

T.  Under  natural  laws  issues  depend  upon,  and  are  propor- 


48  POLITICAL    ECONOMY. 

tioned  to,  agencies  My  object  is  to  prove  the  possibilities  of  the" 
provision  in  store  for  human  necessities.  If  I  argue  from  the 
example  of  lands  that  are  highly  cultivated,  without  considering 
the  cost  to  be  encountered  in  bringing  up  the  inferior  qualities  of 
land,  and  of  subduing  the  best  that  are  waiting  their  turn  and  time 
for  service,  I  am  inviting  you  to  see  the  law  of  harmony  between 
the  growth  of  numbers,  increase  of  wealth  and  power,  and  the 
improvement  of  machinery,  on  which  progress  is  conditioned,  and 
which  is  now  manifesting  itself,  step  by  step,  as  the  demands  for 
masterly  cultivation  proceed.  Remember  the  terms  of  the  great 
charter,  "  Increase  and  multiply,  and  replenish  the  earth,  and 
subdue  it,"  that  you  may  have  dominion  over  all  the  realms  of 
your  appointed  sovereignty. 

Why  should  wheat,  fruits,  and  roots,  adapted  to  human  use,  be 
produced  in  advance  of  the  need,  only  to  rot  in  a  surplusage  be- 
yond the  current  requirement  ?  Nature  is  an  economist  of  means 
and  agencies. 

D.  Instead  of  limiting  political  economy  to  its  usually  assigned 
province,  "the  production,  distribution,  and  consumption  of  wealth;" 
instead  of  confining  it  strictly  to  a  system  of  exchanges  of  market- 
able commodities  and  other  values,  which  has  been  generally 
held  by  the  authorities  in  the  science  and  in  popular  regard  to 
cover  at  once  the  industries  and  the  commerce  of  men  in  society, 
you  make  the  general  welfare  of  communities,  in  all  their  earthly 
interests,  the  subjects  of  its  laws. 

August  Gomte  insists  upon  treating  the  complex  relations  of 
society  in  solidarity  ;  but,  I  think,  the  most  capable  of  his  critics 
follow  the  analytic  method,  such  as  has  been  successful  in  the 
investigation  of  the  inorganic  creation,  and  even  generally  in  the 
vital  and  moral  departments  of  science. 

T.  I  cannot  think  of  a  steam-engine  in  action  by  confining  my 
notice  to  the  coal  or  the  water  which  give  it  its  impulse.  I  must 
take  the  whole  machinery  of  the  assemblage  of  modifying  and 
inter-dependent  forces  in  all  their  relations.  I  do  not  believe  that 
the  measurement  of  a  granary,  the  invoice  of  imports  and  ex- 
ports, or  the  reports  of  the  money  market,  make  up  the  whole  study 
of  man's  material  conditions.  I  cannot  sever  him  from  his  rela- 
tions and  dependence  upon  external  things.     Theoretical  barriers, 


RENT.  49 

set  up  by  systematizers,  between  theology,  ethics,  politics,  and 
industrial  affairs,  disintegrate  the  man.  I  accept  all  the  ologies, 
held  within  their  proper  provinces,  as  tributary  sources  of  informa- 
tion. A  chemistry  of  man  does  not  include  his  life.  When  a  child 
breaks  a  saucer  he  holds  the  pieces  together  and  says,  "  That's  the 
way  it  was  ;"  but  the  fragments  lack  their  structural  connection. 
I  understand  it  better  in  its  entirety,  for  in  that  the  use  consists  and 
is  manifested.  I  believe  that  Comte's  method  of  treating  the  social 
functions  and  relations  in  the  ensemble,  has  never  been  successfully 
refuted. 


CHAPTER  VI. 
KENT. 

T.  Agriculture,  being  the  pursuit  that  requires  acquaintance 
with  the  most  numerous  branches  of  the  natural  sciences,  if  not 
the  largest  amount  of  knowledge  in  them,  is  necessarily  latest  of 
full  development.  It  must  wait  for  completeness,  until  chemistry, 
meteorology,  vegetable  physiology,  and  machinery  shall  have  done 
their  best  for  the  uses  of  cultivation.  As  yet  the  relations  of  man 
to  land  are  not  availably  formulated  for  the  use  of  theoretic  dis- 
cussion. Some  parts  of  this  great  body  of  knowledge  are  well 
enough  ascertained  for  use  ;  but  even  these  are  subjects  of  differ- 
ence and  dispute  among  economists  ;  the  strongly  contested  and 
most  unsettled  among  its  questions  is  the  theory  of  rent.  As  the 
problem  presses  upon  the  thinkers  and  legislators  of  England  it 
seems  a  gordian  knot  so  difficult  to  untie  with  logic  that  it  is  about 
to  be  cut  by  the  sword  of  absolute  authority.  The  House  of  Com- 
mons has  given  it  the  first  chop  with  the  last  argument — the  bat- 
tle-axe of  force.  The  lords,  for  the  present,  protect  themselves 
behind  the  shield  of  tradition, — a  stern  gun  fired  in  a  retreat, — 
that  must  end  in  a  surrender.  Such  is  British  political  economy 
applied  !  The  theory  of  Ricardo  under  treatment  has  exploded, 
and  all  its  elaborate  justifications  are  in  rubbish. 


50  POLITICAL   ECONOMY. 

P.  You  have  spoken  of  economic  rent,  by  which,  I  suppose,  is 
meant  the  theoretic  or  logical  apportionment  of  the  product  of  land 
to  the  owner  and  tenant,  or  farmer,  respectively, — the  distribution 
of  benefits  of  invested  capital  and  labor.  In  this  respect  agricul- 
ture is  distinguished  from  the  profits  of  other  industrial  arts,  and 
from  the  fees  and  salaries  of  offices,  and  the  rewards  of  the  fine 
arts.     I  think  this  is  the  doctrine  of  the  accepted  authorities. 

T.  This  doctrine  is  the  subject  of  dispute.  The  authors  to 
whom  you  allude  put  land  upon  a  different  economic  basis  from 
all  other  machinery  of  industrial  production.  They  separated  such 
natural  and  indestructible  agencies  in  land  as  do  not  belong  to  any 
of  the  things  that  perish  in  their  use.  J.  S.  Mill  holds  that  "  the 
land  of  a  country  presents  conditions  that  separate  it  economically 
from  the  great  mass  of  the  other  object's  of  wealth."  He  puts  the 
difference  thus  :  "  Movable  property  can  be  produced  in  indefinite 
quantity,  and  he  who  disposes  as  he  likes  of  anything  which  it 
can  be  fairly  argued  would  not  have  existed  but  for  him,  does  no 
wrong  to  any  one.  It  is  otherwise  with  regard  to  land,  a  tiling 
which  no  man  made,  which  exists  in  limited  quantity,  which  was 
the  original  inheritance  of  all  mankind,  and  which,  whosoever  ap- 
propriates, keeps  others  out  of  its  possession,  such  appropriation, 
when  there  is  not  enough  left  for  all,  is,  at  first  aspect,  an  usurpa- 
tion of  the  rights  of  other  people." 

P.  Why  agrarianism,  in  its  extravagance,  communism,  and  even 
nihilism,  got  a  firm  foothold  here,  and  Laisxri \faire  gets  the  go- 
by at  the  same  time.  Is  English  theory  of  political  economy, 
like  that  of  the  French  Proudhon,  based  upon  the  axiom,  "  Prop- 
erty is  robbery  ?" 

T.  Property  in  land,  you  mean  ?  If  that  property,  though  it  be 
in  fact  like  any  other  property,  wholly  due  to  labor  and  capital 
applied  to  its  creation,  is  based  upon  a  different  right,  or  no  right 
at  all,  the  theory  is  answerable  for  the  result, — it  is  no  man's 
land.  Every  occupant  is  an  usurper;  but,  curiously  enough,  not 
of  the  rights  of  other  people,  for  nobody  has  any  exclusive  right 
to  any  portion  of  it. 

P.  As  you  put  the  point,  the  argumentum  <"/  horninem  runs 
fairly  into  the  argumentum  ad  absurdum. 


RENT.  51 

T.  I  am  right.  Professor  Cairoes*  goes  the  full  length  of  this 
logic.  He  denies  a  natural  right  of  property  in  anything,  "  even 
in  that  which  our  hands  have  just  made."  "It  is  not  right,"  he 
says,  "  that  it  should  belong  to  us  because  we  have  made  it ;  ,but 
it  is  expedient  that  property  so  acquired  should  belong  to  him  who 
so  acquires  it." 

P.  What  is  the  end  of  all  this  theorizing  ? 

T.  It  has  no  end.  It  is  compelled  to  reason  in  a  circle.  It  is 
invented  to  support  the  proposition  that,  "  in  whatever  manner  the 
plans  are  made,  that  promise  to  be  effectual  (in  amending  the  land 
laws  of  Ireland),  they  involve  at  bottom  the  principle  of  depriving 
landlords  of  the  power  of  raising  rent ;  the  principle,  therefore,  of 
imposing  on  the  State  the  obligation  of  saying  what  a  fair  rent 
is."  I  said  these  people  reason  in  a  circle.  Professor  Cairnes, 
like  a  mouse  that  goes  in  by  the  same  hole  he  came  out  at,  after 
a  play  in  the  moonshine  on  the  carpet,  hedges  his  theoretic  ven- 
ture by  conceding  that,  "  so  far  as  the  productive  qualities  of  soil 
have  been  permanently  improved,  the  added  value  rests  upon  the 
same  foundation  as  property  in  corn,  wine,  or  houses." 

D.  The  evil  of  rack-rent  (the  full  value  of  the  premises,  or  near 
it),  and  of  the  unrestricted  liberty  to  fix  its  amount,  so  severely 
felt  in  England  and  Ireland,  must  admit  of  some  remedy. 

T.  And  the  theory  of  the  economists  must  be  reversed  to  admit 
that  remedy. 

P.  What  is  the  true  theory  of  rent  ? 

T.  A  safe  basis  may  be  found  in  certain  fundamental  proposi- 
tions which  are  to  be  credited  to  the  system  of  Mr.  Carey.  Ac- 
cording to  his  doctrine  land  is  a  machine  in  functions  and  uses  ;  it 
is  under  the  laws  which  govern  all  the  productions  of  labor  and 
skill.  Its  so-called  original  and  indestructible  powers  make  no 
part  of  its  exchange  value.  Its  value  is  wholly  due  to  labor,  in 
the  comprehensive  meaning  of  the  word.  Postulating  these  proposi- 
tions he  proceeds  to  general  principles,  which  are  self-proved. 
There  is  a  law  of  uniform  relation  between  the  quantity  of  capital 
employed  and  the  quality  of  the  labor  in  a  community, — a  law 
connecting  every  increase  and  every  diminution  of  the  former  with 

*  Professor  of  Political  Economy,  University  College,  London. 


52  POLITICAL   ECONOMY.  • 

a  corresponding  improvement  and  of  deterioration  of  the  latter. 
In  other  words,  the  active  and  passive  agents  in  production  are 
married  together  "  for  better,  for  worse," — principles  which  are 
resolvable  into  the  following  corollaries  : — Labor  gains  increased 
productiveness  in  the  proportion  that  capital  contributes  to  its 
efficiency,  just  as  the  inclined  plane,  lever,  and  screw  augment  the 
power  of  the  hand  that  employs  them.  All  the  implements  of  the 
industrial  arts,  as  well  as  food  and  clothing,  are  supplied  by  capital 
in  the  equipment  of  the  laborer. 

Every  improvement  in  the  efficiency  of  labor  so  gained  by  the 
aid  of  capital  is  so  much  increased  power  of  accumulation,  which 
grows  usually  as  compound  interest  grows  upon  its  principal. 

The  increase  of  accumulated  capital  resulting  lessens  the  value 
in  labor  of  products  already  existing,  and  brings  them  more  easily 
within  the  purchasing  power  of  present  labor,  for  the  reason  that 
no  commodity,  however  much  labor  it  may  have  required  for  its 
production,  can  command  the  value  of  more  labor  than  is  required 
for  the  reproduction  of  the  like  thing,  or  its  substitute  at  the  time. 

D.  These  generalities  are  entirely  admissible  ;  but  how  do  they 
apply  to  the  value  and  to  the  rent  of  land  ? 

T.  If  all  the  advantages  of  land  which  command  rent  are  due 
to  labor  in  the  last  analysis,  its  price  of  value  must  come  under  the 
common  law  which  governs  all  the  other  productions  of  capital  and 
labor ;  and  the  title  to  them  is  the  same  as  that  in  all  products  of 
industry. 

D.  Admitting  the  government  of  these  general  laws,  how  does 
it  happen  that  land  prices  and  rents  rise  constantly  with  the  rising 
demand  for  the  property  in,  and  for  the  use  of  them  ? 

T .  To  answer  this  question,  I  must  call  to  my  aid  the  true  defi- 
nition of  value.  It  is  the  measure  of  the  resistance  which  nature 
opposes  to  our  command  of  the  things  required  for  our  service. 
Now  land  under  improvement  is  in  proportion  less  reluctant,  and 
in  capability  richer,  or  worth  more.  Principal  value,  thus  pro- 
duced, and  rent  are  equivalents  of  the  labor  saved  to  the  purchaser 
and  farmer.  These  qualities  of  service  are  the  property  of  the 
improver  and  of  his  assigns.  They  are  the  right  and  the  reward 
of  industry  applied  in  bringing  the  subject  up  to  its  serviceable- 
ness  to   the  degree  attained.     Enhancement  of  every  good  and 


RENT.  53 

valuable  thing  increases  its  utility,  and  therefore,  of  right,  com- 
mands a  higher  price,  and  a  higher  rent,  wages,  or  fees. 

Carry  with  you,  in  all  reasonings  upon  values,  the  guiding  prin- 
ciple : — Nothing  can  increase  in  principal  or  interest,  in  price  or 
hire,  but  land  and  labor.  These  are  the  raw  materials  and  the 
converting  agency  of  all  the  physical  means  of  human  support,  and 
they  must  rise  in  value  as  they  grow  in  usefulness,  under  the  rea- 
sonable law  that  in  commerce  we  get  nothing  for  nothing. 

D.  Commodities  cheapen  in  price  continually  under  improve- 
ment in  production. 

T.  Values  are  uses,  not  things.  Raw  material  rises  in  value 
as  it  is  made  more  useful  by  labor  ;  but  commodities  of  every  kind 
decline  in  cost  as  they  are  made  more  readily  to  decline  in  re- 
sistance to  converting  labor  and  skill.  The  machine  costs  the  more 
as  it  is  the  more  efficient,  and  its  product  costs  the  less  as  its  capa- 
bility enhances. 

It  happens,  even  in  our  disordered  social  and  commercial  affairs, 
that  land  and  labor  do  enhance  continually  in  exchange  value,  and 
their  products  as  constantly  abound  and  cheapen  in  all  progressive 
commodities.  The  normal  tendency  of  the  laws  to  which  they  are 
subject,  in  such  conformity  as  we  witness,  is  the  endeavor  to  even- 
tuate themselves  in  the  facts  of  experience. 

P.  Economic  rent  differs  from  that  exacted  by  the  monopolists 
of  land. 

T.  As  widely  as  the  ten  commandments  from  the  morals  of 
general  society.  A  philosophy  of  disorder  is  simply  impossible. 
A  theory  of  the  right  and  the  true  is  a  criticism  of  error  and  fal- 
sity, as  well  as  a  directory  of  conduct. 

D.  The  ideal  of  societary  order  and  organization — the  rule  of 
righteousness  in  human  affairs — seems  to  recede  more  and  more  in 
the  progress  of  civilization.  Prophecy  is  not  history,  nor  is  it 
directory  for  the  conduct  of  things  as  they  are. 

T.  That  conclusion  is  the  necessary  consequence  of  the  doc- 
trines you  have  accepted.  But  is  it  true  ?  Is  there  no  advance 
from  the  savage  state  to  the  civilization  already  reached  ?  Do  not 
the  achievements  of  every  decade  assure  the  candid  and  capable 
observer  of  the  tendency  to  better  still,  and  better  in  an  indefinite 
progression  ?     Even  the  prevailing  government  of  fraud  in  socie- 


54  POLITICAL   ECONOMY. 

tary  history  is  an  improvement  upon  the  old-time  rule  of  force  and 
still  greater  fraud.  Savage  morals  allow  the  appropriation  of  the 
goods  of  other  tribes,  but  we  have  something  corrective  in  inter- 
national law.  We  have  a  law  that  says,  thou  shalt  not  steal,  and 
opinion  and  civil  government  do  something  to  enforce  it.  The  brute 
force  of  barbarism  is  its  one  sufficient  warranty.  Civilization  recog- 
nizes the  inviolability  of  the  rights  of  others,  even  while  evading 
its  authority,  just  as  hypocrisy  pays  tribute  to  integrity,  and  tends 
and  works  that  far  towards  conformity.  The  societary  system  is 
not  growing  worse,  but  better,  both  in  practice  and  in  creed.  The 
multitude  are  better  clothed,  fed,  and  housed  than  they  were  in  the 
reign  of  Henry  VIII.  in  England.  Daring  his  reign  he  hanged 
70,000  of  the  emancipated  British  serfs  for  offences  against  prop- 
erty, and  incidentally  against  life, — crimes  which  destitution  com- 
pelled,— a  proportion  of  the  population  of  the  kingdom  at  the  time 
equal  to  five  executions  every  day  in  the  State  of  New  York  now. 
Famine  and  pestilence  were  then  inevitable  and  continuous.  Educa- 
tion in  the  elements  of  literature  is  rapidly  becoming  universal  with 
us  ;  but,  in  the  reign  of  Edward  VI.  (A.  D.  1550),  Parliament 
passed  a  law  giving  the  benefit  of  peerage,  equivalent  to  the  benefit 
of  clergy,  to  peers  of  the  realm  who  could  not  read! — a  change 
in  favor  of  the  present  age,  significant  of  a  general  amelioration  of 
the  changed -conditions  and  vast  improvement  in  the  common  life. 
Macaulay,  in  his  History  of  England,  vol.  1,  chap.  3d,  says  that, 
as  lately  as  A.  I).  1685,  "  bread,  such  as  is  now  given  to  the  in- 
mates of  a  British  workhouse,  was  seldom  seen  even  on  the  table 
of  a  yeoman  or  shopkeeper.  The  great  majority  of  the  nation 
lived  almost  entirely  on  rye,  barley,  and  oats."  There  was  a  time, 
not  very  long  since,  when  a  copy  of  the  Bible  was  chained  to  the 
church  altar  for  the  perusal  of  the  parishioners.  Now  a  better  copy 
can  be  had  for  less  than  the  price  of  a  half  day's  labor  at  hod-car- 
rying. Such  and  an  infinite  number  and  value  of  the  changes  for 
the  better  lies  between  the  now  and  the  then ! 

P.  The  sources  of  wealth,  in  general  terms,  are  the  gratuitous 
services  of  nature,  made  available  by  the  capital  and  labor  em- 
ployed upon  them. 

T.  That  is  a  fair  summary;  but  the  knowledge,  which  is  power, 
presses  always  inwardly  and  downwardly  toward  the  elements  and 


RENT. 


55 


basis  principles  of  things.      Generalities  have   excellent  uses  in 

classification  ;   as,  in  the  animal  world,  orders,  genera,  and  species 

are  indispensable  collocations.     The  like  service  is  rendered  in 

the  study  of  inanimate  things  ;  it  bundles  and  pigeon-holes  classes 

and  kinds  ;  keeps  them  within  reach,  and  in  an  assortment  that 

gives  an  easy  command  of  them.     But  it  is  not  enough  to  have' 

general  and  common  notions  of  things.     The  word  metal  does  not 

i    •  i 

make  us  acquainted  with  the  differences  between  gold,  iron,  steel, 

lead.  Science  is  knowledge  pushed  to  elements  and  atoms.  I 
have  already  stated  what  I  take  to  be  the  contributing  forces  in 
the  growth  of  wealth  ;  not  with  the  distinctiveness  and  exactitude 
of  a  technical  analysis,  but  with  such  intrusions  or  overlappings 
of  some  of  the  divisions  upon  others  as  are  likely  to  occur  in  their 
discussion.  The  method  compelled  by  inquiry  into  social  subjects 
is  unavoidably  that  which  Comte  calls  the  ensemble,  as  opposed  to 
the  fragmentary,  and,  let  me  say,  the  distracted.  Some  of  the 
factors  in  the  growth  of  wealth,  indeed  all  of  them,  in  ministering 
to  a  common  aim  and  end,  interlock  in  operation.  They  should 
be  considered  respectively  and  separately,  so  far  as  their  unity  of 
service  permits. 

D.  The  process  and  the  means  of  the  acquisition  of  wealth 
should  be  judged  and  measured  by  their  necessity  and  use  in 
human  life.  Communist  societies,  by  limiting  the  requirements, 
escape  the  disappointments  of  the  people  in  our  loose*  civilization. 
Supply,  however  abundant,  only  meets  and  satisfies  demand.  The 
o-rowth  of  wealth  only  meets  the  growth  of  requirement ;  and 
where  is  the  difference  in  results  between  much  and  little,  if  they 
that  gather  the  little  of  the  manna  have  no  lack,  and  they  that 
gather  much  have  nothing  over  ? 

T.  You  mean  that  such  communists  as  the  Shakers  and  Rapp- 
ites  escape  the  panics  and  the  bankruptcies  of  trade.  They  suffer 
no  revulsions  of  business,  simply  because  they  have  no  active  part  in 
the  societary  movement.  To  the  extent  that  they  are  separated  from 
the  live  world  around  them,  they  are  mere  parasites  upon  it.  The 
crazy  world  around  them  must  build  their  railroads,  and  make 
their  markets ;  and  their  content  within  themselves  is  only  a  smoth- 
ering compromise  of  wants  and  means.  Do  they  grow  in  their 
proper  human  nature  under  %the  forced  repression  of  their  natural 


56  POLITICAL    ECONOMY. 

endowments,  or  do  they  only  vegetate  ?  They  do  not  even  repro- 
duce, much  less  augment  themselves.  A  clod  or  a  stone  grows 
only  by  accretion  from  without,  not  by  development  from  within. 
They  cannot  even  be  said  to  be  alive  to  all  the  purposes  of  life. 

D.  When  you  say  that  the  race  grows  richer  and  richer  at 
every  advanced  stage  of  productive  power,  you  are  only  saying 
that  they  need  and  consume  so  much  the  more. 

T.  The  royal  preacher,  who,  from  the  "  wisest  man,"  turned 
out  the  biggest  fool  in  Jewish  history,  said  :  "  All  is  vanity  and 
vexation  of  spirit."  Like  Samson,  their  strongest  man,  he  ended 
his  career  of  profligacy  by  covering  himself  under  his  own  ruins. 
The  proverb  is  handsomely  capped  by  a  better  and  truer  one, 
"  Every  want  becomes  a  pleasure  when  redressed,"  and  "  happi- 
ness is  our  being's  end  and  aim."  This  happiness  is  best  defined 
to  be  the  gratification  of  our  active  faculties,  and,  of  course,  is  in 
proportion  to  their  number  and  activity, — the  satisfaction  or  full 
supply  of  their  demands.  This  is  answer  enough  to  the  philosophy 
which  limits  itself  to  the  boundary  of  a  tub, — a  wisdom  that 
growls  at  progress,  enjoyment,  luxury,  in  the  notion  that  they 
must  end  in  effeminacy, — a  sermon  that  turns  into  a  song,  with  the 
refrain,  "  Man  must  work,  and  woman  must  weep,  while  the  world 
goes  round  and  round,"  for  the  doleful  ditty  has  no  idea  that  the 
world  ever  goes  forward. 

D.  All  useful  production  ends  in  consumption. 

T.  No,  consumption  is  not  the  end,  for  it  is  reproduction.  In 
a  very  good  sense  production  is  as  immortal  and  imperishable  as 
the  producer.  The  food  which  you  consume  becomes  strength  of 
physical  force  and  energy  of  mind.  Well-being  is  measured  by 
the  consumption  of  aliments  and  all  the  supplies  of  our  needs. 
Wealth  does  not  consist  in  commodities,  but  in  the  service  which  they 
render.  Productions  of  a  people,  which  they  do  not  themselves 
consume,  directly  or  indirectly,  are  not  wealth  in  its  true  ministry. 
Foreign  exports,  derived  and  subtracted  from  their  creators,  mark 
the  condition  of  States  "  where  wealth  accumulates  and  men 
decay." 

I).  Of  course  I  did  not  mean  that  any  kind  of  power  should  be 
arrested  in  its  infancy,  nor  even  that  "  he  that  increaseth  knowl- 
edge increaseth  sorrow,"  but  only  th#t  fulness  relates  to  capacity  ; 


RENT.  57 

that  limited  needs  are  better  supplied  than  unlimited.  My  ob- 
structive objections  are  provoked  by  your  way  of  treating  familiar 
subjects.  It  is  more  difficult  and  a  wider  range  of  thought  than 
the  usual  method.  It  is  not  so  dull,  especially  when  statistics  are 
enlivened  by  indulgence  in  the  romance  of  natural  history,  and 
in  the  narrative  of  common  events. 

T.  The  romantic  in  the  study  of  nature  is  fully  matched  by  the 
marvellous  in  the  achievements  of  art.  Look  with  eyes  as  wide 
open  as  wonder  can  stretch  them,  and  as  sharp-sighted  as  reflective 
thought  can  make  them,  at  the  achievements  in  progress  and  in 
promise  among  the  sources  of  wealth — the  supplies  for  consump- 
tion— the  means  of  enjoyment — the  mastery  of  nature.  Take 
together  the  wonderful  service  of  labor-saving  machinery,  and  the 
resulting  enhancement  in  the  quantity  and  quality  of  the  commodi- 
ties of  use.  In  some  of  these  things  the  achievements  of  indus- 
trial art  are  marvellous  enough  to  make  the  fictions  of  magic  com- 
mon in  the  facts  of  everyday  experience.  The  magic  carpet  and 
the  wooden  horse  of  The  Arabian  Nights  seem  but  the  prototypes 
of  the  balloon,  and  the  electric  telegraph  ;  the  enchanted  apple, 
which  cured  disease  by  its  perfume,  prefigures  the  infinitesimal 
doses  of  homoeopathy ;  and  sub-sepulchral  spirit  intercourse  is 
trying  to  realize  the  old-time  fairy  interventions  in  human  affairs. 
I  do  not  assume  the  success  of  these  supernatural  enterprises  ;  but 
I  suggest  that,  probably,  imagination  cannot  invent  anything  that 
enterprise  will  not  at  last  realize.     We  grow  by  aspiring. 

i).  lam  prepared  for  the  annihilation  of  time  and  space,  and 
of  the  theories  of  things  governed  by  earthly  conditions.  But  I 
have  heard  oratory  and  read  poetry  enough  to  look  for  something 
newer  and  more  substantial  in  science. 

T.  Perhaps,  then,  we  can  find  something  new  enough  and  actual 
enough  in  the  old  to  deserve  attention  in  the  study  of  our  theme. 

Allow  me  to  advert  to  the  fact  that  the  materials  which  must  be 
made  to  answer  our  wants  must  undergo  changes  of  form  and  place 
before  they  are  utilized ;  and  that,  in  such  needed  conversion  and 
transportation,  the  forces  of  nature  stand  in  resistance  to  the 
powers  and  purposes  of  man.  Indulge  me  here  if  I  say  that  some- 
thing of  the  super-natural  must  be  brought  against  this  natural  to 
5 


58  POLITICAL   ECONOMY. 

compel  obedience  ;  and  we  look  for  something  fitting  in  the  instru- 
mentalities we  possess  for  the  achievement  of  our  victories. 

Among  the  "mechanical  powers"  are  the  screw,  the  com- 
pound pulley,  and  the  wheel  and  axle.  Nowhere  in  nature  is 
either  of  these  found.  Nature  has  the  lever,  the  inclined  plane, 
gravitation,  and  that  form  of  it  which  we  call  cohesion,  but  these 
man  has  as  well. 

Now  observe  that  the  power  of  the  screw,  the  compound  pulley, 
and  the  wheel  and  axle  are  ultimate  facts,  measurable  in  force, 
but  absolutely  inexplicable  in  essence.  Possibly  they  are  resolv- 
able into  the  force  of  the  inclined  plane,  but  how  mysteriously 
modified  and  multiplied  in  efficiency  !  There  the  miracle  comes 
in  ;  there  resides  the  delegated  omnipotence  and  omnipresence  of 
the  Creator  in  such  degree  as  answers  all  our  ends. 

D.  The  momentum,  or  force  of  motion,  is  well  understood  to  be 
the  weight  multiplied  into  the  velocity  of  a  body  in  motion,  and 
is  capable  of  mathematical  measurement.  Where  is  the  mystery 
of  the  lever  power  in  any  of  its  modifications  which  you  claim  to 
be  supernatural  ? 

T.  The  power  of  the  lever  is  effective  before  the  velocity  begins 
to  exist  or  act,  else  the  lever  would  not  budge  the  resistant  weight. 
How  does  difference  in  length  of  the  arms  of  a  lever  generate  dif- 
ference of  power  in  them?     When  a  pound  weight  suspends  a 
hundred  in  motionless   stillness,  whence   comes   the   momentum ; 
where  is  the  impulse?     We  supply  instinctively  the  power  be- 
tween cause   and  effect.     Dr.  Thomas  Brown,  of  the  Edinburgh 
University,  refused  to  use  the  words,  because  he  could  only  infer 
efficiency,  and  he  insisted  upon  using   instead   antecedence   and 
subsequence,  as  the  whole  of  what  we  can  know  of  the  phenomenon. 
This  is  what  I  have  to  say  of  the  agency  of  machinery  in  pro- 
duction ;  I  think  it  is  quite  as  miraculous  in  the  inanimate  imple- 
ments as  are  the  vital  powers  of  the  soil.     These  energies  are  to 
me  alike  influxes  of  the  creative  All-mightiness. 

I).  We  have  heard  of  sermons  in  stones,  books  in  the  running 
brooks,  and  good  in  everything  ;  but  a  mimic  or  miniature  omnipo- 
tence in  dead  machinery  transcends  the  range  of  the  inductive 
philosophy. 

T.  As  it  should,  if  man  is  invested  with  the  sovereignty  over 


EENT.  59 

his  material  surroundings  which  stand  in  opposition  to  his  domin- 
ion ;  if  he  is  really  created  in  the  image  of  his  Creator  and  Gov- 
ernor. I  am  tempted  to  quote  a  rhapsody  of  Paul  de  Saint  Victor, 
which  is  not  all  a  fancy — rather  a  simple  truth,  glowing  with  its 
proper  fervor : — 

"  The  imagination  of  an  artist  is  keenly  surprised  at  witnessing 
creatures  of  wood  and  metal  imitate  human  actions  with  human 
intelligence.  They  are  not  living,  but  who  can  say  that  they  are 
wholly  dead  ?  Mechanism  is  a  mysterious  transition  between 
inanimate  nature  and  organic  existence.  The  breath  of  the  soul 
has  passed  thereby.  Pygmalion  has  conjured  them  up  to  breathe 
into  them  something  of  life  and  human  characteristics." 

P.  How  do  statistics  exhibit  the  power  gained  by  the  employ- 
ment of  artificial  labor  ? 

T.  If  the  hairs  of  our  heads  may  be  numbered,  so  may  the 
works  of  our  hands  be  estimated.  When  numerals  run  up  toward 
infinity  they  become  incomprehensible.  Professor  Rodgers,  State 
Geologist  for  Pennsylvania,  represents  the  dynamic  value  of  fossil 
coal  in  such  figures  as  these :  — 

"  One  pound  of  coal  consumed  in  the  improved  Cornish  engine 
gives  the  mechanic  force  which  one  man  effects  by  a  day's  toil  in 
a  tread-mill ;  and  three  tons  as  much  power  as  one  man  produces 
in  twenty  years,  of  three  hundred  working  days  each  year." 

Assuming  that  twenty  million  tons  are  applied  per  year  to  the 
production  of  mechanical  products,  it  follows  that  England  an- 
nually commands  the  aid  of  seven  millions  of  fresh  men,  having 
the  equivalent  of  their  labor-power  through  a  period  of  twenty 
years.  The  sum  of  this  auxiliary  force  represents  that  of  one 
hundred  and  forty  millions  of  laborers.  This  for  an  island  num- 
bering but  twenty-two  millions  of  people,  all  told,  and  of  whom 
there  are  not  more  than  twelve  millions  of  men  and  women  be- 
tween the  ages  of  15  and  60,  is  a  stupendous  productive  force. 
It  is  safe  to  say  that,  in  the  use  of  coal,  modern  civilization  sup- 
plements its  natural  labor-power  with  an  auxiliary  addition  at  least 
twelve  times  its  own  capabilities.  I  will  not  undertake  to  say  how- 
much  the  dynamic  effectiveness  thus  developed  from  coal  by  heat 
is  enhanced  through  the  intervention  of  machinery. 

P.  I  understood  this  measurement  to  be  that  of  the  power  at  a 


60  POLITICAL  ECONOMY. 

dead  lift  against  weight  or  resistance  ;  and  it  is  probably  more 
than  matched  by  the  velocity  of  the  motion  gained  by  the  mechani- 
cal modifications  in  application,  as  in  hammers,  shutters,  rollers, 
and  wheels.  These,  under  a  speed  like  that  of  lightning,  seem  to 
stand  still  in  a  rapidity  that  defies  the  detection  of  sight. 

T.  Strength  is  sometimes  combined  with,  sometimes  sacrificed 
to,  velocity.  We  have  an  example  of  such  a  compromise  in  the 
human  arm,  where  the  longest  lever  is  given  to  the  hand  against 
the  much  shorter,  in  the  nearness  of  the  inserted  motor  muscle 
acting  upon  the  fulcrum  at  the  elbow.  In  the  adjustments  of 
forces  to  uses  all  forms  of  mechanism  conform  to  their  intention. 
Steam  in  harness  has  at  once  enormous  force  and  a  miraculous 
celerity.  Yet  its  prodigies  of  power  and  speed  employed  in  our 
service  are  instances  of  human  command  obtained  and  obtainable 
over  masses  of  matter,  and  over  time  and  space  in  the  work  of 
conversion  and  transportation.  Over  the  elements  and  atoms 
mind  is  achieving  control  still  more  wonderful.  The  incantations 
of  chemistry  set  free  the  latent  forces  of  the  material  creation 
and  rehearse  its  miracles  in  its  re-creations.  It  compels  the  sub- 
ject substances  of  our  dominion  to  take  all  forms  of  use  at  the 
bidding  of  the  spirit  that  masters  its  mysteries ;  and,  that  which 
is  most  noteworthy  in  the  present  age,  and  most  promising  for  the 
oncoming  generations,  is  the  practical  application  which  follows  so 
closely  upon  the  heels  of  scientific  discovery.  Handicraft  keeps 
company  with  its  revelations.  Material  forces  which  in  the  olden 
time  were  neglected  or  feared,  under  the  direction  of  machinery, 
in  our  day,  grow  as  light-limbed  and  strong-handed  as  the  thought 
they  are  intended  to  execute.  Machinery  becomes  bone  and  mus- 
cle to  the  brain  of  science,  and  nerves  and  sinews  to  practical 
enterprise.  Dead  matter  is  made,  in  all  its  aptitudes,  subject  to 
the  will  of  man. 

D.  You  are  making  a  fairy  tale  of  the  history  of  our  common- 
place industries. 

T.  Fairy  tales  were  of  necessity  invented,  in  the  early  age  of 
natural  knowledge,  to  supply  the  felt  deficiencies  of  natural  phi- 
losophy. Influences  out  of  the  reach  and  ken  of  the  senses 
required  the  agency  of  unseen  spiritual  ministries  to  account  for 
the  phenomena  of  experience.      A  hierarchy  of  angels,  in  both 


RENT.  61 

the  Old  and  New  Testaments,,  represents  this  overruling  provi- 
dence, and  our  science  is  rapidly  advancing  toward  the  apprehen- 
sion of  spirit  power  in  the  wonder-workings  of  material  things. 
Tyndall  and  Huxley  are  on  the  very  verge  of  spiritism ;  not  of  its 
quackeries,  but  of  its  scientific  demonstration,  by  the  inductive 
method,  which  is  as  much  compelled  to  look,  for  adequate  causes, 
as  the  a  priori  system  is  ready  to  supply  them.  Materialism  is 
approaching  that  higher  stage  in  its  advancement  at  which,  to 
divine  the  system  of  things,  it  must  admit  Divinity  as  an  efficient 
factor. 

D.  Oratory  in  the  exposition  of  purely  physical  affairs  is  intru- 
sive and  inconclusive.  I  think  that  your  notion  of  Political  Econ- 
omy pledges  you  to  find  the  benefits  of  its  study  in  the  welfare 
of  the  race  and  of  the  individual.  This  expectation  is  not  fulfilled 
merely  by  showing  or  imagining  what  man  can  do  or  might  do, 
but  what  through  that  he  shall  be  and  become. 

T.  You  are  right.  Man  is  the  object,  external  things  with  their 
conditions  and  relations  to  him  are  only  tributaries.  All  that  is 
claimed,  or  need  be  claimed,  for  the  increase  of  the  apparatus  of 
production,  is  the  resulting  abundance  and  availableness  of  the 
necessaries  and  the  enjoyments  of  life ;  and,  that  through  this  ever 
growing  abundance  of  supply  there  is  a  broadening  diffusion  of 
benefits  and  blessings.  This  describes  and  measures  the  increase 
of  the  general  or  aggregate  wealth  of  a  community:  men  better 
and  better  provided  with  the  commodities  which  sustain  their  ani- 
mal life  ;  with  the  luxuries  that  refine  it ;  increasing  release  from 
drudgery,  and  with  the  inducements  and  opportunities  that  come 
with  these  ameliorations  for  lifting  man  toward  his  highest  possi- 
bilities and  noblest  attainments.  When  we  come  to  treat  the  sub- 
ject of  the  wages  of  labor,  we  shall  be  able  to  show  how  all  these 
blessings  tend  to  descend  in  larger  measure  upon  the  poor,  yet, 
as  well,  to  the  rich;  for  they  are  not  at  all  partial  to  any  class  of 
their-beneficiaries;  being  providential  like  the  sun,  they  are  made 
"  to  rise  on  the  evil  and  on  the  good,  and  like  the  rain,  are  sent 
upon  the  just  and  on  the  unjust."  Matth.  v.  45. 

I).  It  may  be  admitted  that  the  multiplication  in  quantity  and 
quality  of  all  the  products  of  industry,  except  of  food,  is,  by  an 
allowable   hyperbole,  unlimited.      But   food   is  the   staff  of  life. 


62  POLITICAL    ECONOMY. 

Whatever  be  the  possible  abundance  of  other  things,  a  deficiency 
or  failure  of  nutriment  is  famine,  disease,  and  death  to  all  the 
forms  of  life,  animal  and  vegetable. 

P.  Death  in  the  midst  of  life  and  health  alone  prevents  a  fatal 
disproportion  of  subsistence  in  the  world  of  the  inferior  animals. 
Why  should  not  the  rule  and  the  remedy  obtain  in  the  province 
of  humanity  under  the  like  conditions  and  with  the  same  design  ? 

T.  Without  handicapping  your  proposition  with  its  startling 
moral  consequences,  which  would  make  our  earthly  life,  not  a 
purgatory  of  trial  and  preparation,  but  a  veritable  hell  of  evil  and 
disorder,  I  will  try  to  meet  your  questionings  by  the  rules  of 
inductive  reasoning. 

In  the  first  place,  brute  life  and  human  life  are  not  in'the  same 
category,  as  your  assumed  analogy  places  them.  Notice  the  dif- 
ferences in  endowments  and  manifest  destiny.  Not  many  of  the 
inferior  tribes  have  a  family  order,  and  none  of  them  have  hospi- 
tals, or  other  reliefs  for  their  sick,  or  make  provision  for  the  fail- 
ing strength  and  the  incapacities  of  old  age.-  The  instinct  that 
cares  for,  the  young  is  very  general;  but  benevolence  or  filial 
devotion  are  not  given  to  them.  When  their  age  of  maturity  is 
reached  they  show  none  of  the  affections  which  would  relieve  the 
sufferings  or  extend  the  life  of  their  kindred.  Their  individual 
and  social  impulses  and  relations  are  fulfilled  in  the  prime  of  their 
powers.  They  have  no  history  teaching  by  example.  They  die 
intestate.  Nothing  in  them  or  of  them  looks  to  the  education  or 
prosperity  of  the  generations  to  follow  them.  The  ultimate  issues 
of  their  existence  are  in  their  subservience  to  the  higher  forms  of 
life  that  environ  them.  They  are  by  destiny  the  provender  of 
their  contemporaries.  Violent,  or  what  we  would  call  premature 
death,  is  a  coup  de  grace  to  them.  The  end  of  their  animal  exist- 
ence is  the  fulfilment  of  its  purpose  and  use.  It  is  therefore 
illogical  to  infer  from  their  rate  and  date  of  mortality,  that  it  is  a 
provision  to  remedy  an  excessive  fecundity.  The  allusion  in  your 
argument  is  good  for  nothing  if  the  cause  of  their  premature 
death  is  found  in  their  constitution  and  destiny.  Perhaps  only 
one  acorn  in  a  million  grows  into  an  oak  tree.  They  are  the  food 
of  other  lives  as  well  as  germs  of  their  own  generation.  Can 
you  find  any  analogy  between   their  apparent  waste  of  vitality 


RENT.  63 

and  the  infant  mortality  of  our  kind  ?  In  reasoning  by  analogy 
like  must  be  compared  with  like.  It  is  nugatory  as  to  all  the  dif- 
ferences. The  inferior  animals  are  born  into  the  order  of  their 
life.  This  very  completeness  of  endowment  and  attainment  before 
the  education  of  instruction  and  experience  clearly  indicates  the 
purpose  fulfilled,  and  the  incapability  of  further  and  better  uses. 
Grains  and  fruits  are  capable  of  the  propagation  of  their  kind, 
but  they  are  also  provided  for  the  sustenance  of  men  and  animals. 
Is  the  destruction  of  their  vitality  an  accidental  failure  of  pro- 
vision for  their  maintenance  ?  Unless  man  is  a  beast,  the  analogi- 
cal argument  which  you  employ  is  utterly  irrelevant. 

D.  I  can  afford  to  yield  the  argument  from  an  assumed  corre- 
spondence of  the  subjects  adduced  ;  but,  the  facts  of  experience, 
the  records  of  human  history,  are  not  impeachable.  Men  do  suffer 
from  deficiency  of  food,  and  even  die  of  famine,  and  these  pre- 
vailing facts  and  incidents  of  human  life  still  remain  to  be  met 
and  disposed  of. 

T.  Your  premises  do  not  cover  all  the  facts  and  forces  involved 
in  the  question  under  examination.  The  law  regulating  population 
must  be  understood  and  considered,  before  we  can  usefully  discuss 
the  relation  of  the  numbers  of  men  to  the  provision  of  food.  I 
must,  therefore,  postpone  your  objections  until  we  have  inquired 
into  the  cause  of  the  facts  relied  upon,  if  those  facts  do  not  explain 
themselves.  The  normal  order  of  things  is  not  always  found  in 
simple  or  surface  appearances.  The  natural  sciences  are  full  of 
instances  in  which  superficial  observation  is  contradicted  by  deeper 
research.      , 

D.  All  this  is  granted,  but  I  still  wait  to  see  how  the  law  of 
population  can  contradict  its  manifest  operation. 

T.  No  law  contradicts  its  own  operations.  We  must  find  the 
harmony  and  dependency  of  cause  and  effect  here  if  we  find  the 
truth  that  connects  them  alike  in  natural  order  and  in  accidental 
disorder.     This  we  shall  endeavor  in  its  proper  place. 


64  POLITICAL  ECONOMY. 

CHAPTER  VII. 
COMMERCE  AND  TRADE— SOURCES  OF  WEALTH. 

P.   It  strikes  me  that  Malthus,  McCulloch,  Ricardo,  and  Mill 

limited  their  observations  to  thickly  settled  portions  of  the  earth, 
when  they  drew  the  broad  conclusion  of  incapacity  of.  the  soil  to 
support  a  constantly  increasing  population.  It  is  clear  enough 
that  where  the  area  furnishing  the  required  food  is  small  enough, 
their  doctrine  applies.  The  people  of  a  village  or  city  without 
other  provisions  than  their  little  gardens  yield,  would  soon  starve. 
It  may  be  answered  that  these  despairing  theorists  had  in  contem- 
plation whole  islands  and  even  large  territories  of  civilized  coun- 
tries, with  crowded  populations,  but  does  this  liberal  allowance 
of  conditions  exclude  important  auxiliaries  which  greatly  affect 
their  conclusions  ? 

T.  This  thought  brings  up  the  contributions  to  the  growth  of 
wealth  by  foreign  trade  and  domestic  commerce.  For  instance  : 
take  the  exports  of  cotton  fabrics  from  England,  which  grew  at  a 
twofold  rate  in  the  decade  1850-60,  over  those  of  1840-50. 
These  constituted  full  three-eighths  (38.3  per  cent.)  of  the  value 
of  all  her  domestic  exports  in  the  year  1860;  when  her  iron, 
steel,  cutlery,  and  other  manufactures  of  these  metals,  of  which 
she  had  at  home  the  raw  material  and  the  agents  of  conversion — 
these  metallic  exports  amounted  to  only  11T67  per  cent.,  or  less 
than  one-eighth  of  the  total.  Her  imports  of  the  i-aw  materials 
used  in  the  manufacture  of  cottons,  silks,  and  woollens,  that  year 
(1860)  were  valued  at  47  J  millions  of  pounds  sterling.  Their 
export  value  reached  75  millions,  which  gave  her  a  difference  in 
exchange  of  27  J  millions  (133|  million  dollars) — nearly  58  per 
cent,  of  profit,  exclusive  of  the  20  millions  of  pounds  worth  con- 
sumed at  home.  These  three  textile  products  from  foreign  mate- 
rials gave  employment  to  700,000  laborers,  whose  wages  supported 
nearly  three  millions  of  her  population,  and  yielded,  besides,  a 
large  profit  to  her  capitalists,  amounting,  perhaps,  to  15  per  cent. 
of  the  export  values.  Add  to  these  imports  the  vegetable  and 
animal  food,  and  a  vast  variety  of  miscellaneous  articles  of  tropic 


COMMERCE    AND    TRADE — SOURCES    OF    WEALTH.  65 

and  other  foreign  production  which  her  labor  purchases,  and  it  is 
probable  that  four-fifths  of  her  resources  come  to  her  from  abroad. 
The  United  Kingdom  has  risen  from  one  and  a  half  to  six  thou- 
sand millions  of  pounds  sterling  in  capital  wealth  since  the  United 
States  sent  her  the  first  bale  of  cotton,  in  A.  D.  1790. 

I).  Your  protective  policy  in  the  restriction  of  foreign  trade 
does  not  allow  such  a  system  of  exchanges  as  has  built  up  the 
wealth  of  Great  Britain. 

T.  The  true  system  of  international  trade  allows  of,  and  pro- 
vides for,  the  exchanges  of  differences  that  are  complementary  ; 
while  it  forbids  the  evils  of  domination  and  dependency.  It  allows 
for  and  embraces  equitable  and  mutually  advantageous  trade  for 
the  nations  conditioned  upon  a  rightful  adjustment  of  the  several 
interests;  otherwise,  the  natural  rights  of  the  several  communities 
of  the  earth,  and  the  harmony  of  the  whole,  are  impracticable. 
But  these  equities  of  trade  are  not  postponed  till  the  millennium. 
Righteousness  works  through  all  disorders  towards  its  own  con- 
summation,  and  is  as  wise  and  good  at  every  stage  of  its  progress 
as  it  intends  in  its  ultimate  triumph.  A  rightly  regulated  inter- 
national trade  during  the  periods  of  inequality  of  industrial  skill 
is  as  profitable  to  the  undeveloped  as  to  the  more  advanced  com- 
munities. It  is  equally  necessary  and  advantageous  to  the  less 
capable  party  so  long  as  trade  is  not  allowed  to  repress  its  natural 
growth  ;  just  as  pupilage  is  beneficial  to  childhood  duly  directed 
to  the  prospective  independence  and  self-government  of  maturity. 
The  perfect  law  of  liberty,  which  is  also  a  law  of  life,  authorizes 
and  requires  the  full  activity  of  all  the  powers  possessed,  all  the 
.*  capabilities  attained,  which  can  serve  for  the  onward  progress  in 
being  and  doing. 

When  in  the  fulness  of  time  universal  harmony  of  interests 
shall  be  realized,  and,  all  along,  as  it  approaches,  the  exchanges 
of  diverse  climates  and  unlike  industrial  capabilities  of  peoples, 
will  rightfully  serve  the  good  purposes  of  foreign  trade,  without 
its  existing  evils.  Cotton,  coffee,  tea,  and  spices,  which  do  not 
grow  everywhere,  must  be  imported  for  the  use  of  those  who  need 
and  cannot  produce  them.  The  trade  in  vegetables  across  climates 
is  at  once  a  necessity  and  a  bond  of  union  between  the  North  and 
South.     It  is  complementary  and  not  competitive.     It  is  a  policy 


66  POLITICAL    ECONOMY. 

of  peace  and  of  mutual  prosperity.  There  is  nothing  in  it  of  a 
Avar  of  interests.  Protection  is  defence.  It  is  not  aggression  or 
monopoly.     But,  of  this  more  anon. 

D.  For  the  reasons  that  you  allow  a  free  exchange  of  those 
commodities  which  do  not  compete  with  or  displace  the  labor  and 
raw  materials  of  an  importing  country,  you  would  allow  a  free 
foreign  exchange  between  the  communities  where  a  like  necessity 
arises  out  of  different  degrees  of  productive  power. 

T.  You  state  the  accommodations  of  the  rule  something  too 
broadly.  I  limit  them  to  the  temporary  incapacity  of  the  pioneer 
and  earliest  stages  of  societies,  where  there  is  neither  the  capital, 
nor  the  labor  and  skill  required  for  self-supply,  and  where  an 
exchange  of  raw  for  finished  goods  is  profitable  to  the  less  capable 
peoples.  A  new  people,  poor  and  weak-handed,  may  properly 
give  their  timber,  corn,  wool,  and  their  gold  and  silver  ores  for 
cloth,  glass,  tools,  and  machinery,  so  long  as  they  cannot  make 
them.  But  free  trade,  in  its  commonly  intended  meaning,  is  an- 
other thing;  and,  let  me  suggest,  that  it  is  in  itself  a  misnomer. 
It  means  free  foreign  trade,  which  is  a  material  corrective  of  its 
true  bearing  upon  the  question  at  issue. 

I).  If  I  were  not  so  unfortunate  as  to  be  told  that  I  am  fre- 
quently out  of  time  with  my  objections,  I  should  have  something 
more  to  say  in  justification  of  the  principles  and  policy  of  free 
trade. 

T.  Excuse  me  for  sometimes  telling  you  that  you  are  out  of 
place.  The  conductor  of  a  train  must  keep  on  the  road,  and  to 
do  this  he  requires  the  switch  tracks  connected  with  it  to  be  shut 
off.  Our  baggage  is  checked  for  the  through  trip,  and  we  must 
pass  the  junctions,  leaving  them  to  the  way-trains,  for  which  they 
arc  provided. 

Domestic  Commerce  as  a  Source  of  Wealth. 

D.  Profit  and  accumulation  of  wealth  by  a  nation,  through  its 
foreign  trade,  is  easily  understood  ;  but  how  can  domestic  ex- 
changes between  the  individuals  of  a  community  increase  the  com- 
mon  stock  ?  The  dealers,  buyers,  and  sellers  are  a  partnership, 
in  which  one  can  only  gain  at  the  loss  of  another.  The  business 
is  only  a  distribution  of  properties,  not  an  increase  of  the  aggre- 


COMMERCE    AND    TRADE —SOURCES    OF    WEALTH.  67 

gate.  Two  boys,  shut  up  in  a  room,  cannot  make  five  dollars 
apiece  by  fifty  exchanges  of  their  jackets,  shoes,  and  hats.  These 
goods  are  worth  no  more  at  the  end  than  at  the  beginning  of  their 
trading. 

T.  Huckstering  and  bartering  are  not  commerce.  Its  true 
meaning  embraces  production  and  service,  as  well  as  exchanges. 
It  does  not  consist  merely  in  an  alteration  of  the  property-right 
in  things  which  makes  no  change  in  their  value,  but  in  their  crea- 
tion, as  well  as  in  the  convenience  of  their  distribution  for  con- 
sumption and  service. 

The  original  sin,  in  the  definition  of  political  economy  by  the 
authorities  which  you  follow,  breaks  out  into  actual  transgression 
at  every  turn  of  the  theory.  It  sweats  out  at  every  pore  of  its 
hide.  Archbishop  Whately  boldly  and  baldly  makes  it,  not  a 
theory  of  production  and  exchange,  but  what  he  calls  catallac- 
tics,  or  the  science  of  exchanges  ;  that  is,  of  products  after  they 
have  come  into  market. 

D.  Facility  and  accumulation,  effected  through  "the  division  of 
labor,"  territorial  and  individual,  according  to  capability,  are 
prime  features  of  the  free  trade  theory. 

T.  Yes,  that  maxim  of  Adam  Smith  is  followed  and  abused  by 
his  professed  followers,  until  it  produces  all  the  mischievous  effects 
of  a  falsehood.  McCullough,  a  representative  of  the  school,  illus- 
trates the  division  of  labor  as  a  supplier  of  the  subjects  of  com- 
merce ;  but,  totally  overpassing  the  commerce  of  home,  he  breaks 
at  once  into  rhapsodies  in  admiration  of  foreign  trade,  in  which 
everything  is  cheapened,  everything  is  distributed,  everything  is 
first  carried  away  from  everybody,  everything  is  carried  back 
again,  and  trade  grows  prodigiously!  Thus  trade  gives  competi- 
tion all  possible  play,  for  everybody  is  put  to  working  with  and 
against  everybody  ;  whereupon  he  concludes,  with  the  enthusi- 
astic outburst,  "  All  is  mutual,  reciprocal,  and  dependent,"  which 
is  quite  as  good  a  description  of  the  mutualities  and  reciprocities 
of  a  chain-gang  of  convicts,  or  a  bench  of  galley-slaves.  But 
political  economy  is  not  a  system  of  exchange  values  in  market ; 
it  is  a  theory  of  the  productive  power  of  a  people,  and  it  is  not 
cosmopolitan  in  its  direct  intention,  but  primarily  national  in  its 
proper  province  ;  and  only  indirectly,  though  effectually,  subser- 


68  POLITICAL  ECONOMY. 

vient  to  the  wide  world's  advancement  in  wealth.  Mr.  Carey 
rightly  uses  the  word  commerce  for  the  exchange  of  services,  pro- 
ducts, and  ideas  by  men  with  their  fellow-men,  with  the  least  pos- 
sible intervention  of  other  agents  ;  and  he  limits  the  word  trade 
to  the  exchanges  made  by  intermediates  for  their  primaries,  the 
producers. 

P.  What  is  the  relative  money-value  of  foreign  imports  to 
home  production  for  consumption  in  the  United  States  ? 

T.  The  home  production  is  usually  about  twelve  to  one  of  the 
foreign  imports.  Moreover,  we  must  not  measure  the  Economic 
value  or  utility  by  the  market  prices  of  the  products  of  industry 
and  the  supplies  of  traffic.  In  the  United  States  but  little  raw 
material  is  imported — little  that  affords  the  further  profits  of  con- 
verting skill,  or  employs  labor  and  capital  in  reproduction.  Nine- 
tenths  of  the  imported  merchandise  go  directly  into  consumption- 
expense,  not  accumulation  of  capital.  The  foreign  wines  and 
spirits,  the  sugar,  coffee,  tea,  jewelry,  and  fancy  dry-goods,  like 
the  toys  and  trinkets,  do  not  take  the  character  of  manufacturing 
stock  or  materials  ;  and  such  goods  as  iron,  woollens,  and  cottons 
are  not  only  expenses  in  their  use,  but  they  also  displace  the 
home  labor  which  they  might  employ.  I  am  thinking  of  the 
wealth-producing  price  of  industry  and  commerce. 

P.  How  are  the  accepted  estimates  of  national  wealth  and  of 
its  growth  made,  and  how  far  are  these  estimates  reliable? 

T.  A  damaging  uncertainty  in  these  calculations  is  in  the  want 
of  assuring  data.  In  the  matter  of  foreign  trade,  custom-house 
reports  approach  the  truth  when  quantities  are  given ;  but,  when 
only  money-valuations  are  reported,  beside  the  wide  fluctuations 
of  prices,  the  frauds  of  undervaluations  greatly  increase  the 
errors  of  fact ;  so  that  even  among  the  items  of  official  reports, 
there  is  a  tickly-bender  support  for  the  footsteps  of  inquiry. 

P.  If  the  best  authenticated  statistics  are  so  uncertain,  we 
must  look  elsewhere  for  the  evidences  of  the  accumulation  of 
wealth.  The  general  prosperity  of  the  people  is  a  less  exact,  but 
a  better,  measure  or  indication  of  the  changes  in  its  condition. 
The  fruits  of  industry  and  enterprise  garner  themselves  in  the 
acquired  provision  for  consumption — in  the  actual  supply  of  neces- 
saries and  luxuries. 


COMMERCE    AND    TRADE — SOURCES    OP    WEALTH.  69 

T.  A  pretty  large  acquaintance  with,  and,  I  think,  a  fair  judg- 
ment of,  statistics,  makes  me  doubt  their  testimony  on  the  subject 
of  national  wealth  and  its  rate  of  growth.  Statisticians  are  all 
afloat  in  their  estimates  of  domestic  production  and  traffic.  The 
European  authorities  who  have,  or  ought  to  have,  the  best  means 
of  information,  make  their  estimates  from  the  tax  registers,  such 
as  excise  charges,  incomes  paying  an  assessment,  probates  of  dece- 
dents' estates,  insurances,  export  values,  investments  in  stocks, 
and  the  like  indications  of  business  affairs.  On  data  so  incom- 
plete and  so  inexact  as  these,  the  calculations  of  experts  are  very 
far  apart.  General  contradiction  and  confusion  result  from  the 
differences  in  the  methods  adopted. 

P.  Of  the  United  States,  its  population,  capital  invested  in 
productive  industry,  value  of  its  products,  value  of  real  property, 
amount  of  wages  paid,  the  census  at  every  decade  gives  us  the 
official  statistics.  Is  not  this  a  safer  guide  than  the  English  plan? 
T.  Don't  be  startled  if  I  say  I  don't  think  it  affords  as  near  a 
report  of  the  actual  condition  of  our  affairs.  Read  the  notes 
appended  to  the  census  report  of  our  industries  for  the  year  1870, 
by  the  Superintendent,  to  find  how  little  faith  these  official  reports 
deserve,  and  the  unavoidable  causes  of  their  errors. 

P.  If  the  figures  of  these  reports  have  so  little  arithmetical 
value,  how  are  we  to  form  any  judgment  upon  the  subjects  with 
which  they  are  concerned? 

T.  Through  years  of  diligent  study  I  have  innocently  and  can- 
didly looked  for  the  assuring  results  which  the  experts  in  the  sta- 
tistics of  national  wealth  seemed  to  promise,  and  I  have  pulled*up 
in  the  conclusion  that  arithmetical  renderings  are  neither  true  nor 
necessary  to  the  understanding  of  the  subject.  After  all  our 
investigations  of  particulars  and  elements  of  the  great  problem, 
wealth  in  substances,  in  property  and  in  credit,  in  possession  and 
in  prospect,  resolves  itself  into  welfare.  Means  are  only  Uses, 
and  I  conclude  that  the  condition  of  a  community  is  best  found  in 
its  capability  of  consumption.  The  dress  and  demeanor  of  our 
hirelings,  the  expenses  of  the  common  people,  who  do  not  go  into 
bankruptcy,  expenses  in  their  festivities  and  enjoyment  of  leisure, 
the  adequacy  of  wages  to  supply  the  necessities  and  comforts  of 
life,  the  advancing  intelligence  and  of  elementary  learning  gene- 


70  POLITICAL    ECONOMY. 

rally  prevailing — in  all  the  forms  in  which  the  effects  of  accumu- 
lation express  themselves — are  safer  data  than  money  measures 
afford  for  calculation.  One  can  know  a  change  of  place  and  its 
difference  from  the  point  of  departure  by  its  circumstances  and  its 
scenery  without  measuring  the  distance  in  miles.  Money  values 
are  not  measures  of  the  social  situation.  The  loss  and  gain  in 
the  footings  of  mercantile  accounts  decide  nothing  of  moment  in 
the  question  of  welfare.  In  that  is  found  the  real  loss  and  gain 
of  labor  and  trade. 


Improvement  in  Travel  and  Transportation,  a  source  of  growing 

Wealth. 

T.  The  cost  of  transporting  food  and  merchandise  between  our 
Western  and  Eastern  States,  was  in  1870  from  a  cent  and  a  half 
to  two  cents  per  ton  per  mile.  Now  (1880)  one  of  the  highest 
authorities  in  railway  matters  says  that  five-eighths  of  a  cent  for 
the  same  service  is  perfectly  satisfactory.  The  effect  of  this 
reduction  in  the  freight  cost  is  as  though  the  grain  fields  and  pas- 
tures west  of  the  Mississippi  River  were  moved  bodily  eastward 
to  the  longitude  of  Ohio  and  Western  New  York.  If  a  quarter 
of  a  ton  of  bread  and  meat  will  feed  a  grown  man  in  Massachusetts 
for  a  year,  a  single  day's  labor  of  the  commonest  kind  will  pay  for 
the  transportation  of  the  year's  supply  of  these  provisions  from  a 
distance  of  one  thousand  miles  ;  or  one  day's  wages  places  the 
Massachusetts  laborer  next  door  to  the  Western  prairies,  a  thou- 
sand miles  away.  I  am  old  enough  to  remember  that,  in  the  year 
1820,  the  freight-cost  of  mixed  merchandise  by  a  road-wagon,  car- 
rying about  a  ton  and  a  half  over  the  mountains  of  Pennsylvania, 
from  Philadelphia  to  Pittsburg,  315  miles,  cost  in  the  spring 
season,  when  the  roads  were  bad,  eleven  dollars  per  hundred 
weight,  and  required  about  thirteen  days  to  make  the  trip.  The 
freight  at  this  rate  was  3|  cents  per  ton  per  mile,  and  the  reduc- 
tion of  its  cost  effected  in  sixty  years  is  more  than  82  cents  upon 
every  hundred  cents  of  the  earlier  expense.  Observe  that  rates 
of  freight  vary  with  kinds,  an  1  are  further  and  greatly  varied  by 
the  circumstances  and  relations  of  the  transporting  companies. 
They  now  range  so  much  as  from  a  dollar  and  a  quarter  per  100 


COMMERCE    AND    TRADE — SOURCES    OF    WEALTH.  71 

pounds  down  to  forty  cents.  I  think  it  is  safe  to  say  the  cost  of 
the  transportation  of  goods  300  miles  across  the  Allegheny  Moun- 
tains has  fallen  in  sixty  years  from  say  three  cents  per  ton  per 
mile  to  less  than  one  cent,  and  the  speed  of  delivery  has  increased 
more  than  ten  times.  A  like  rapidity  of  relative  rate  of  travel 
and  reduction  of  expense  is  not  quite  reached  in  the  average,  but 
they  have  been  excelled  in  special  instances. 

I).  How  do  these  changes  aifect  the  growth  of  wealth  in  the 
community  ? 

T.  They  increase  the  home  value  of  commodities  to  the  pro- 
ducer, and  diminish  their  cost  to  the  distant  consumer ;  and,  as 
wealth  is  the  power  to  command  the  services  of  nature,  the  facility 
and  the  cheapness  of  sustenance  must  in  proportion  increase  that 
power  of  command.  The  resistance  of  time  and  space  are  ab- 
ridged and  overcome,  and  the  degree  of  the  mastery  obtained  in 
the  struggle  measures  the  welfare  of  the  victor.  When  Alexander 
Hamilton,  at  Albany,  New  York,  and  John  Marshall,  at  Rich- 
mond, Virginia,  were  struggling  for  the  establishment  of  the 
federal  Constitution,  it  took  five  days  with  post-horses  to  carry 
messages  between  them.  It  could  be  done  in  five  minutes  now, 
and  at  a  hundred  times  less  expense.  I  do  not  insist  upon  arith- 
metical calculations  of  the  rate  or  the  amount  of  this  progress,  for 
numerals  are  not  measures  of  its  value.  The  highest  good  of  life, 
even  where  weights  and  measures  of  material  things  are  involved, 
is  not  expressible  in  dollars  and  cents.  They  serve  only  as  meas- 
ures of  the  substances  which  are  factors  in  the  process.  The 
results  are  to  be  found  in  the  moral  and  intellectual  forces  com- 
bined, which  transmute  them  into  a  higher  use  in  human  welfare, 
as  digestion  gives  life  to  material  aliment. 


72  POLITICAL  ECONOMY. 

CHAPTER  VIII. 

SUBSTITUTION. 

T.  For  the  purpose  of  bringing  into  review  one  of  the  most 
fruitful  and  ever-growing  sources  of  wealth,  I  have  chosen,  a  phrase, 
not  very  accurate,  but  sufficiently  distinctive  to  present  its  agency. 
I  mean  the  power  of  improving  our  condition  by  substituting  the 
better  and  more  abundant  for  the  failing  supply,  or,  for  the  less 
serviceable  subjects  which  we  have  at  command  at  any  time  in  the 
progress  of  our  attainments.  '  We  have  briefly  noticed  the  provis- 
ions of  this  beneficent  tendency,  in  the  increase  of  labor-saving 
machinery  ;  in  the  improvement  of  travel  and  transportation  ;  in 
the  vast  increase  in  the  quality  and  quantity  of  manufactures  ;  in 
the  rapidly  growing  yield  of  agriculture,  both  by  improved  culti- 
vation and  extension  of  territory,  waiting  for  the  growing  demand 
upon  its  fruitfulness  ;  in  the  aids  and  facilities  of  commerce  and 
trade  in  the  distribution  of  commodities,  providing  for  the  inequal- 
ities of  product  that  occur  in  the  diverse  regions,  and  capabilities 
of  soil  and  climate ;  in  the  almost  miraculous  helps  of  the  natural 
sciences  and  arts  in  extending  the  dominion  of  man  over  the  sub- 
ordinate creation — all  these  provisions,  actual  and  potential,  in 
achievement  and  in  promise.  And  now  we  turn  to  still  another 
source  of  prosperity,  entitled  to  special  consideration :  I  mean 
the  constantly  increasing  substitution,  for  the  uses  of  life,  of  the 
cheap  for  the  costly,  the  plentiful  for  the  scarce,  the  inexhaus- 
tible for  the  failing,  the  better  for  the  inferior,  which  is  manifest 
in  such  facts  of  experience,  among  others,  as  I  shall  submit  in 
proof  of  our  general  proposition,  that,  we  are  already  in  advance 
of  the  savage  and  all  intermediate  stages  of  civilization,  and  in 
full  career  toward  the  better  time  coming. 

A  few  of  the  mile-stones  that  mark  and  measure  the  route  of 
progress  in  human  affairs  are  such  as  these :  Within  a  few  years 
gas,  of  mineral  origin,  with  materials  in  unlimited  quantities,  has 
been  substituted  for  animal  oil  in  the  production  of  artificial  light. 
An  equally  good  and  greatly  cheaper  supply  from  water  has  been 


SUBSTITUTION.  73 

secured,  and  only  waits  its  time  for  general  adoption  ;  and  elec- 
trical light,  cheaper  and  better  than  either,  is  looming  in  the  near 
approach  of  its  common  use. 

For  light  and  heat,  and  to  meet  the  immense  demand  for  the 
lubrication  of  machinery,  and  of  the  rolling-stock  of  railways, 
mineral  oils  have  recently  opened  up  in  rivers  from  the  interior 
of  the  earth,  replacing  vegetable  and  animal  oils,  which  require 
so  large  a  surface  of  soil,  and  so  much  labor  in  their  production — 
a  beneficence  of  provision  in  the.  matter  of  heat  and  light  kindred 
to  the  inexhaustible  store  of  fossil  coal  that  comes  to  supply  the 
relatively  scanty  and  rapidly  failing  stock  of  the  vegetable  mate- 
rial. And  still  another,  and  equally  great  defence  against  cold,  is 
afforded  by  the  increased  supply  of  clothing,  and  the  improvements 
of  domestic  architecture.  These  together,  ever-more  increasing 
in  abundance  and  cheapness,  serve  also,  in  a  proportionate  reduc- 
tion of  food,  otherwise  required  to  meet  the  waste  of  animal  heat. 
These  accumulating  ameliorations  result  in  the  extension  of  the 
average  life  of  a  generation  from  about  thirty  to  forty  years 
since  the  beginning  of  the  present  century.  I  need  not  say 
how  much  of  comfort,  luxury,  and  leisure  for  the  higher  offices 
of  existence  they  contribute. 

P.  A  register  of  the  aggregate  benefits  of  such  substitution  of 
the  better  for  the  inferior  means  of  subsistence,  in  all  kinds,  is 
grandly  manifest  in  the  comparative  history  of  the  race  from 
savagery  up  to  civilization. 

T.  You  have  in  mind  some  illustrative  instances  ? 

P.  In  the  history  of  the  Iroquois,  or  "the  Six  Nations,"  of 
American  Indians,  I  was  surprised  to  find  that  at  the  time  William 
Penn  landed  on  the  Delaware,  these  people,  occupying  the  region 
extending  from  the  Potomac  to  the  chain  of  the  Northern  Lakes, 
and  from  Connecticut  to  the  Alleghany  River,  did  not  number 
more  than  2500  inhabitants  all  told.  At  the  present  time  the 
same  area  contains  and  sustains  11  or  12  millions  of  people  in 
comfort  and  abundance.  Here  there  is  no  decline  in  the  fertility 
of  the  land  under  judicious  culture,  and  no  death-dealing  dispro- 
portion of  sustenance  to  population. 

T.  The  contrast  is  heightened  by  the  fact  that  under  the  savage 
management  of  the  soil,  aided  as  it  was  by  the  food  supplied  by 
6 


74  POLITICAL  ECONOMY. 

the  beasts  and  birds  of  the  wilds,  and  the  fish  of  the  rivers,  a 
thousand  acres  scarcely  sufficed  for  the  support  of  one  man.  Fam- 
ines and  their  attendant  diseases  were  of  very  frequent  occurrence. 
These  people  were  capable  of  a  political  organization,  in  essentials 
the  prototype  of  our  State  and  Federal  governments.  Their  "  Long 
Lodge  "  was  a  representative  congress  of  its  leading  people,  differ- 
ing from  ours  mainly  in  this,  that  it  gave  a  separate  deliberative 
chamber  for  their  women  in  joint  council.  Yet,  Avith  so  high  a 
grade  of  attainment  in  the  policy  of  commonwealth  affairs,  they 
had  so  little  government  of  the  industries  necessai'y  to  the  growth 
and  preservation  of  a  people. 

I  think  we  have  a  clearer  and  stronger  illustration  in  the 
authentic  history  of  the  Israelites,  from  the  time  of  Abraham  to 
that  of  Joseph.  These  people,  through  whom  we  have  the  law  and 
the  prophets,  on  which  Christianity  rests,  were  often  compelled  to 
draw  their  supplies  from  Egypt,  which  had  a  vastly  better  system 
of  industrial  production.  The  progeny  of  Jacob  sold  their  inheri- 
tance, as  Esau  sold  his,  for  a  mess  of  pottage.  A  people  that  does 
not  acquire  and  hold  the  mastery  of  their  native  land  must  go  into 
slavery  under  those  that  do.  In  modern  times  they  become  a  sort 
of  serfs  on  their  own  soil.  Their  masters  are  in  the  foreign 
market,  which  fixes  the  price  of  both  what  they  have  to  sell  and 
what  they  must  buy.  A  slave  is  one  who  is  the  subject  of  a  power 
outside  of  himself.  Independence  is  not  a  national  flag  or  a  docu- 
ment ;  it  is  a  condition  of  life.  It  consists  of  current  events  of 
experience,  not  in  written  constitutions.  The  man  that  pays  out 
all  he  earns  to  his  employer  lives  in  a  rented  house,  and  must 
travel  up  and  down  other  people's  stairs  in  the  dwelling  that  he 
calls  his  home.  Tenancy  for  a  term  of  years,  or  for  life,  is  not  a 
fee  simple  or  allodial  estate.     This  is  not  economic  independence. 

P.  A  natural  history  of  the  process  of  substitution  in  the  means 
of  subsistence,  even  limited  to  an  outline  drawing,  would  interest 
and  instruct  one  so  new  to  the  subject  as  I  am. 

T.  Forest  fruits  in  their  seasons,  and  animal  food  from  the 
forests,  rivers,  and  air,  are  first  drawn  upon  for  food  supplies.  These, 
beside  depending  largely  upon  climatic  influences,  are  secured  at 
a  continually  increasing  toil  and  vigilance,  with  a  resulting  de. 
crease  of  yield.     In  this  state  of  things  the  "  dismal  science  "" 


SUBSTITUTION.  75 

apostles  may  find  abundant  proof  of  their  theory.  War,  pestilence, 
and  famine  go  even  beyond  their  assigned  remedial  necessity  in 
the  restriction  of  population. 

At  a  stage  considerably  advanced  above  the  savage,  animal  food 
begins  to  be  supplanted  and  reduced  in  temperate  climates,  and 
almost  displaced  in  the  tropics  and  semi-tropics,  with  gains  pro- 
portionate to  the  substitutions  so  effected. 

Exclusive  animal  food,  where  pasturage  and  prepared  provender 
must  be  used,  requires  ten  or  twelve  acres  of  land  to  grow  the 
flesh-diet  of  one  man  for  one  year's  consumption.  One  acre  of 
wheat  will  support  three  persons,  affording  thirty-six  times  as 
much  sustenance.  One  acre  of  potatoes  yields  the  food  of  nine 
persons,  equal  to  one  hundred  and  eight  times  the  nutriment  pro- 
duced from  the  breadth  of  land  required  to  raise  the  equivalent  of 
flesh-meat.  In  such  ratios  advanced  and  diversified  agriculture 
multiplies  the  means  of  subsistence  by  the  process  of  substitution 
of  the  abundant  for  the  scarce  ;  and  in  like  degree,  though  varied 
in  proportion,  by  all  mixtures  of  these  constituents  of  diet. 

In  the  inferior  animals  we  have  a  clear  demonstration  of  the 
economy  of  a  vegetable  diet.  The  lion,  tiger,  bear,  and  other  car- 
nivorous beasts  and  birds,  multiply  slowly  ;  while  the  vegetable 
feeders — the  horse,  domestic  ox,  and  buffalo — increase  their  num- 
bers immensely.  These  go  in  herds,  while  the  ravagers  of  the 
living  creatures  around  them  roam  almost  alone  in  the  solitudes 
which  they  make.  The  like  observation  applies  to  the  butchers 
and  the  vegetarians  among  birds. 

In  apparel,  as  necessary  to  life  as  food  itself,  and  among  ad- 
vanced communities,  perhaps  equally  expensive,  the  vegetable  flax 
and  cotton  supplant  a  vast  amount  of  animal  wool  and  silk.  One 
acre  of  ground  will  produce  as  much  of  use  in  textile  fabrics  and 
furniture  as  a  hundred  will  yield  in  sheep's  wool.  Of  course  I  do 
not  mean  that  any  one  of  these  substances  should  totally  exclude 
its  correspondent  of  a  different  origin  ;  but  that  the  substitution  in 
s*ome  cases,  and  a  mixture  in  others,  prodigiously  increases  the 
total  stock,  adapts  it  to  diverse  uses,  and  brings  them  all  more 
easily  within  the  means  of  purchase. 

P.  So  far  as  the  mineral  kingdom  can  be  a  resort  from  the 
animal  and  vegetable,  the  acts  of  substitution  must  extend  the 
benefits  of  a  graded  progress,  with  a  cumulative  force  of  product. 


76  POLITICAL  ECONOMY. 

T.  The  course  of  this  process  has  a  curious  analogy  to  the 
inclined  plane  on  a  road-way.  It  begins  or  takes  its  first  step  by 
passing  from  the  fruits  that  grow  above  the  earth  and  the  beasts 
that  roam  over  it,  to  cereals  that  grow  from  it,  and  the  roots  that 
have  their  place  and  nutriment  in  its  bosom.  The  next  advance 
step  is  into  the  bowels  of  the  planet,  in  which  we  find  stores  of 
wealth-giving  materials  absolutely  inexhaustible  ;  the  respective 
supplies  swelling  from  the  transient  and  deficient,  through  the 
abundant  and  ever-renewing,  till  they  reach  the  rank  of  the  per- 
petual and  the  superabundant. 

D.  The  depth  of  this  series  makes  one  dizzy,  as  in  trying  to 
measure  the  unfathomable  ;  but  tell  us,  if  you  can,  how  such 
latent  potency  in  the  materials  of  support  affects,  or  can  affect, 
the  masses  of  men  in  civilized  society.  Something,  much  has  been 
gained,  but  all  along  the  needed,  has  been  much  more  than  was 
ever  realized.  However  ample  the  store  accumulated  and  in 
reserve  may  be,  it  is  only  the  realized  that  counts  in  actual  wel- 
fare. 

T.  To  answer  your  question,  how  the  unquestionable  augmenta- 
tion, already  effected  and  assured  in  prospect,  Avorks  for  the  benefit 
of  those  who  have  no  capital  but  their  labor-power,  it  is  safe  for 
the  present  to  suggest  that  growing  abundance  must  cheapen  its 
subjects  in  the  marts  of  exchange  to  all  consumers  ;  else  what  is 
the  meaning  of  the  maxim,  "  supply  and  demand,"  in  the  philoso- 
phy of  your  favorite  authorities  ? 

D.  Cheapness  is  a  relative  term.  It  has  reference  to  the  state 
of  the  purchaser's  fund,  as  well  as  to  the  nominal  prices  of  the 
market. 

T.  That  question  involves  the  distribution  of  the  products  of 
industry  among  the  several  contributors  concerned.  This  will  be 
best  considered  when  we  come  to  the  investigation  of  the  history 
and  the  law  of  Wages.  Profits,  and  Interest. 

It  occurs  to  me  now  that  the  operation  of  the  law  of  substitution 
would  be  best  exhibited  by  arranging  the  subject  matters  in  the 
juxtapositions  of  a  tabular  statement  where  the  eye  would  help 
the  ear  in  apprehending  it. 

P.  I  have  employed  my  leisure  in  an  effort  to  arrange  the  cor- 
respondent substances,  in  advanced  uses — the  things  supplanted 


SUBSTITUTION. 


77 


by  improved  uses  of  other  things,  increased  in  quantity  and  in 
cheapness  throughout  the  process  of  what  you  call  Substitution. 
I  have  arranged  them  in  three  phases  of  movement.  First,  from 
the  animal  to  the  vegetable  kingdom.  Second,  from  the  animal 
and  vegetable  kingdoms  to  the  mineral.  And  I  have  ventured  to 
add  a  third  transition  from  the  animal,  through  the  vegetable  and 
mineral,  to  that  territory  of  effective  forces  made  tributary  to  the 
world's  work  which  scientists  call  the  Imponderables. 

I  submit  the  list  for  such  consideration  and  criticism  as  it  invites, 
premising  that  I  am  aware  of  its  defects  both  in  subjects  and 
arrangement. 


1st.  From  the  Animal  to  the  Vegetable  Kingdom 
From  animal  food  as  a  chief  supply. 


skins,  wool  and  silk  in  clothing. 

skins  in  sails  and  cordage. 

leather. 

beasts  and  human  porters. 

parchment. 

animal  oils. 


To  vegetable   food   more  and   more 
largely  mixed. 
"  flax  and  cotton  textiles. 
"  hemp  and  jute  in  cloth  and  ropes. 
"  caoutchouc  and  gutta  percha. 
"  the  wooden  canoe. 
"  paper  of  rags  and  vegetable  fibre. 
"  vegetable  oils. 


2d.  From  the  Animal  and   Vegetable  to  the  Mineral  Kingdom. 

To  coal,  gas,  and  mineral  oil. 

"  slate,  brick,  stone,  iron,  zinc,  cop- 
per, tin. 

"  steel  and  gold  pens,  and  metallic 
types. 

"  steel  gravers,  metallic  plates  in 
photography. 

"  transparent  glass. 

"  steel  springs. 

"  iron  locomotive  engines. 

"  metallic  gun  and  shot. 

"  lime,  marl,  gypsum. 

"  mineral  gas. 

"  iron  vehicles. 

'•  metallic  machinery. 

"  heat  of  coal  and  expansibility  of 
steam. 


From  wood  and  peat. 

"  wood  in  houses,  ships,  bridges. 

"  goose  quills. 

"  bristles  in  drawing. 

"  translucent  skins. 

"  feathers  and  hair. 

"  horse,  ox,  camel. 

"  wooden  bow  and  animal  string. 

'.'  animal  and  vegetable  manure. 

"  animal  oil  and  wax. 

"  wooden  carriages. 

"  bone  and  muscle  in  labor. 

"  animal  power. 


78  POLITICAL  ECONOMY. 

3d.  From  Animals,  Vegetables,  and  Minerals  to  the 
Imponderables. 

Electricity  substituted  for      Living    messengers    and    vegetable 

sails. 

Galvanic  heat  "  "       Vegetable  and  mineral  heat. 

Electric  light  "  "       That  from  all  tangible  substances. 

Telephone  and  telegraph     "  "        All  other  mediums  in  conveying  in- 

telligence. 

FROM    INFERIOR   TO    BETTER    OF    THE    SAME    KIND. 

T.  In  this  last  class  you  have  mixed  actual  achievements  with 
possibilities,  which  advancement  of  knowledge  and  power  will  turn 
to  certainties  of  experience  ;  and  you  leave  partially  unnoted,  while 
travelling  from  one  kind  of  substance  to  another  employed  in  the 
same  use,  the  constantly  advancing  substitution  of  the  better  for 
the  inferior  in  the  same  kind  of  things.  For  instance,  paper  made 
into  bricks,  boats,  and  bags  that  resist  fluids  like  glass.  But  the 
transformations,  like  the  transitions  of  all  substances  in  modern 
art,  are  almost  infinite. 

I  think  that  the  testing  of  propositions  by  diagrams,  where 
that  is  possible, — by  tabular  statements  arraying  the  contrasts  and 
correspondences  so  as  to  see  the  relations  of  the  elements  con- 
cerned, is  sure  to  unload  the  student  of  his  prejudices  and  assump- 
tions, and  to  stretch  him  to  his  proper  work  of  knowing  truly  and 
thoroughly  what  he  thinks  vaguely  or  has  learned  trustingly  and 
inexactly. 

P.  Do  you  detect  any  exceptionable  things  in  my  tabular 
statement  ? 

T.  There  are  probably  plenty  of  them ;  some  of  which  you 
will  find  for  yourself  every  time  you  revise  it.  Lord  Bacon 
promised  a  diagram  of  the  order  of  the  sciences,  progressive  and 
successive — a  sort  of  table  of  their  substitutions  and  superven- 
tions, but  he  failed — at  least  his  editors  have  found  nothing  yet, 
either  in  his  publications  or  manuscripts.  So,  cheer  up,  for  you 
also  are  mortal.  Looking  out  for  mistakes  in  your  happiest 
works,  you  may  correct  as  you  discover  them,  ^ince  your  in- 
fancy the  accretions  of  growth  have  displaced  the  effete  atoms  of 
your  physical  frame  ;  yet  you  have  grown  several  inches  through 


SUBSTITUTION.  79 

the  changes  and  substitutions,  and  have  preserved  your  identity 
and  secured  a  good  balance  in  the  account  of  loss  and  gain. 

I  observe  that  you  have  not  assigned  water-gas  to  either  of  the 
kingdoms  of  natural  objects.  Naturalists  have  not  found  the  ter- 
ritorial meets  and  bounds  of  the  watery  world.  It  exists  every- 
where, but  resides  nowhere.  There  is  as  much  of  it  in  the  sky  at 
all  times  as  in  all  the  rivers  of  the  earth  ;  it  permeates  all  things 
that  have  anything  of  life  in  them.  Chemistry  decomposes  it,  and 
recombines  its  elementary  gases;  but,  in  the  geography  of  the 
sciences  it  has  no  determinate  location  ;  like  the  aeriform  and 
electric  fluids,  it  is  boundless.  It  is  somewhat  over-bold  to  call 
it  a  kingdom  within  our  dominions;  because  we  cannot  yet 
answer  the  questions :  "  Hast  thou  entered  into  the  treasures  of 
the  snow  ?  or  hast  thou  seen  the  treasures  of  the  hail?  Hath  the 
rain  a  father  or  who  hath  begotten  the  drops  of  dew  ?  Hast 
thou  entered  into  the  springs  of  the  sea?  Canst  thou  say  to  it, 
hitherto  shalt  thou  come,  but  no  further:  and  here  shall  thy  proud 
waves  be  stayed  ?  "     (Job  xxxviii.) 

D.  I  am  not  sure  that  ignorance  is  bliss,  though  I  enjoy  a  good 
deal  of  it.  I  am  consoled  when  I  hear  my  superiors  acknowledge 
their  deficiencies  in  the  knowledge  that  is  power.  Moreover, 
Solomon  says  "  he  that  increaseth  knowledge  increaseth  sorrow." 

T.  That  proverb  was  uttered  by  one  who  had  a  great  deal  too 
much  experience  in  the  worst  ways  of  life.  The  wisdom  of  the 
creative  Word  is  efficient  for  the  control  of  the  world.  In  the 
degree  that  it  is  attained,  it  brings  its  proportion  of  omnipotence 
with  it.  Reverence  is  due  to  the  knowledge  of  nature.  There 
is  providential  beneficence  in  its  extension  and  diffusion.  It  is 
a  reform  force  that  levels  upward.  Its  design  is  the  adjustment 
of  material  conditions  to  social  interests  universally.  If  water- 
gas  becomes  available  for  heating  purposes  in  the  regions  that 
have  no  coal,  it  will  be  a  world-deliverer  from  industrial  domina- 
tion. The  prophecy  of  growth  in  the  useful  arts,  means  the 
emancipation  and  enfranchisement  of  all  men  in  the  order  of  their 
capability  and  development. 


80  POLITICAL  ECONOMY. 

CHAPTER  IX. 
POPULATION. 

T.  The  distribution  of  wealth  would  fitly  follow  the  examina- 
tion we  have  given  to  the  laws  and  the  process  of  its  accumula- 
tion ;  but  a  preliminary  inquiry  is  involved  in  the  question  of 
sustenance  adjusted  to  numbers — the  law  of  population  in  its 
relation  to  supplies. 

D.  So  far  as  the  increase  of  population  is  concerned,  is  it  not 
enough  to  know  the  natural,  which  is  the  possible  of  requirement? 
Harmony  between  the  possibilities  of  food-supply  and  the  possi- 
bilities of  the  demand  for  it  must  be  the  search,  if  conducted 
according  to  the  conditions  of  the  problem. 

T.  So  the  Malthusian  school  presents  it,  and  they  would  be 
right  if  they  had  the  truth  of  the  factors  ;  which  they  have  not. 

D.  Then  we  are  to  have  a  dispute  about  the  basis  facts  of  the 
doctrine. 

T.  No,  that  school  does  not  trouble  itself  with  the  facts.  The 
difference  is  all  about  inferences  from  assumptions,  as  the  debate 
is  usually  conducted.     But  let  us  begin  with  the  facts: 

Malthus  and  his  followers  assumed  the  rate  of  propagation,  under 
natural  law,  to  be  a  fixed  quantity  or  measure  of  increase.  This 
we  deny  in  toto,  with  all  its  consequences.  First,  let  us  look 
at  the  surface  facts  as  they  present  themselves,  leaving  disturbing 
causes  for  after  examination. 

In  the  sixty  years  next  preceding  the  year  1860,  the  popula- 
tion of  the  United  States  increased  very  nearly  three  per  cent, 
compounded  per  annum,  or,  at  the  rate  of  doubling  once  in  every 
23|  years.  The  native  white  people,  after  deducting  the  immi- 
grants, may  be  put  at  2J  per  cent.,  nearly,  per  annum,  at  which 
they  would  double  in  every  period  of  27  years.  Great  Britain 
(Ireland  excluded)  doubled  its  number  once  in  the  last  fifty  years, 
but,  allowing  for  emigration,  the  period  would  be  reduced  to  46 
years,  or,  1J  per  cent,  compounded  per  annum.  Prussia  in- 
creased at  very  nearly  the  same  rate — 1|  per  cent.;  while 
France,  but  little  affected  by  either  emigration  or  immigration, 


POPULATION.  81 

has  been  adding  to  her  population  in  the  same  period,  no  more 
than  i  of  one  per  cent,  per  annum,  requiring  277  years  to  double 
her  numbers. 

These  instances  are  enough  to  exhibit  the  greatly  varied  rates 
of  increase  of  people  born  and  living  in  their  respective  countries, 
who  are  near  enough  alike  to  be  classed  together  for  comparison 
and  for  criticism  of  the  assumed  rule.  Men  differing  from  each 
other  constitutionally  and  in  local  circumstances  no  more  than  the 
German  and  Celtic  stocks  in  Europe,  and  their  mixed  descendants 
in  America,  are  thus  found  actually  to  differ  in  rate  of  natural 
increase  as  much  as  27,  4(3,  and  277  differ  from  each  other.  Ob- 
serve that  we  are  now  taking  into  the  comparison  only  the  most 
favorably  conditioned  nationalities ;  throwing  out  of  the  account 
the  Irish  and  the  Italians  from  the  British  and  Celtic  families. 

It  must  be  noticed,  also,  that  these  figures  express  the  present 
current  movement  in  the  countries  named.  This  is  very  far  from 
the  fixed  general  rate  of  doubling  every  quarter  of  a  century  pro- 
posed by  Malthus  as  the  natural  law  and  result  of  the  procreative 
function,  and  just  as  far  from  establishing  a  constant  quantity, 
possible  or  actual.  These  are  striking  examples  of  a  departure 
from  the  rule  of  inductive  reasoning  founded  upon  the  facts  of 
observation  and  experiment;  and,  at  the  same  time,  an  instance 
of  deduction  based  upon  assumptions.  J.  S.  Mill  was  right  in 
declaring  that  his  school  of  Political  Economy  "  reasons,  and  can 
only  reason  from  assumptions,  not  from  facts." 

Neither  have  the  rates  of  mortality  any  greater  constancy  or 
universality.  The  death-rate  varied  in  London  in  the  period  of  160 
years  (1685  to  1845)  from  one  in  twenty-three  of  the  inhabitants, 
at  the  former  date,  to  one  in  forty  at  the  latter.  "  The  ordinary 
mortality,"  says  Macaulay,  "  in  the  17th  century  was  as  great  as 
a  visitation  of  the  cholera  would  make  it  in  the  19th."  Thus  the 
main  element — the  very  foundation  of  the  Malthusian  theory  of 
population — is  so  greatly  affected  and  disproved  by  difference  in 
rates  of  increase  in  different  places,  circumstances,  and  dates. 
One  of  these  circumstances  is  particularly  unfortunate  for  the  over- 
population theory — the  population  of  London,  when  its  death-rate 
was  at  the  highest,  was  not  more  than  one-twelfth  of  the  number 


82  POLITICAL  ECONOMY. 

that  the  city  contained  when  their  mortality  was  reduced  to  one- 
half  the  proportion  of  the  earlier  date. 

D.  You  are  not  giving  due  weight  or  any  weight  at  all  to  the 
great  change  in  the  sanitary,  police,  and  charitable  interferences 
that  have  come  into  use  in  the  period  mentioned. 

T.  I  am  presenting  the  facts  which  the  Malthusians  are  bound 
to  explain.  Their  constant  quantity  of  births,  as  measured  by  the 
survivals,  goes  to  pieces  under  the  shock  of  statistics.  Births  are 
not  everywhere  registered,  and  nowhere  accurately.  The  numbers 
of  the  living  and  of  the  deaths  are  much  more  correctly  noted. 
The  deaths  in  England,  in  the  United  States,  and  in  France,  vary 
not  more  than  one  or  two  in  ratio  to  their  total  populations,  while 
the  rates  of  increase  among  the  living  differ  immensely.  England 
loses  annually  a  number  represented  by  40  of  its  people,  the  United 
States  by  45,  and  France  by  44  ;  while  their  respective  rates  of 
growth  are  as  46,  27,  and  277  are  to  each  other.  Now  how  are 
the  survivals  accounted  for  by  a  uniform  ratio  of  births  ? 

D.  I  do  not  know  the  certainty  of  these  facts. 

T.  Neither  do  I  depend  upon  their  arithmetical  accuracy.  They 
are  carefully  collected  and  registered,  and  are  approximations  near 
enough  for  the  data  of  the  inquiry.  I  leave  them  to  engage  the 
enemy's  front,  while  I  turn,  by  a  flank  movement,  to  attack  them 
on  their  indefensible  rear. 

D.  Do  you  mean  to  leave  the  array  of  fact  for  a  better  ground 
of  assault  ? 

T.  Not  exactly ;  I  leave  the  adversaries  to  their  conflict  with 
the  facts,  and  resort  to  a  method  of  discussion  which  rests  upon 
principles,  which  facts  must  follow  and  fulfil  in  the  orderly  pro- 
cedure of  natural  phenomena.  Neither  the  possible  productiveness 
of  the  land,  the  water,  and  the  air,  nor  the  future  rate  of  increase 
in  the  numbers  of  men,  are,  or  can  be,  now  ascertained.  They  are 
not  within  the  range  of  arithmetical  estimates  ;  and  the  problems 
concerning  them  rest,  not  upon  numerals,  but  upon  principles. 

I).  If  these  principles  are  not  found  or  revealed  by  the  facts  of 
observation  or  experiment,  where  are  they  to  be  sought  for  ? 

T.  They  belong  to  the  province  of  final  causes — the  manifest 
design  of  the  system  of  things  of  which  the  subjects  are  a  part. 


POPULATION. 


83 


D.  Does  not  all  of  natural  science  fall  within  the  jurisdiction  of 
the  inductive  system  for  data  and  doctrine  ? 

T.  The  inductive  system  itself  is  compelled  to  assume  that  the 
means  are  provided  in  the  constitution  of  things  for  the  accomplish- 
ment of  the  ends  clearly  indicated. 

D.  A  proposition  so  sweeping  as  this  asks  for  proof. 

T.  The  Baconian,  or  inductive  philosophy  cannot  advance  a 
single  step  in  discovery  without  postulating  the  law  that  the 
prophesy  of  an  end,  in  all  the  realms  of  nature,  is  a  pledge  and 
proof  of  provided  means.  There  is  no  other  basis  for  the  science 
of  existing  substances  and  forces.  For  examples  :— An  orbit  with 
an  apparatus  of  vision  in  a  fossil  skull  proves  a  contemporary  pro- 
vision of  light ;  a  skeleton  chest  found  imbedded  in  a  rock  indicates 
the  coexistence  of  respirable  air;  the  structure  of  a  tooth  teaches 
with  absolute  certainty  the  existence  of  a  suitable  kind  of  food  at 
the  time  of  its  development.  Design  thus  interprets  and  reports 
the  conditions  of  things  in  the  pre-historic  ages.  If  this  guide  to 
the  knowledge  of  nature  is  rejected,  inquiry  is  nonplussed,  and  its 
study  is  brought  to  a  stand-still ;  the  history  of  the  past  is  not 
traceable  in  its  vestiges  ;  and,  outlook  for  the  future  has  no  di- 
rection and  no  results.  So  science,  "  the  science  of  observation, 
experiment,  and  induction  thence  "  builds  its  certainties  as  much 
upon  the  harmonies  of  the  system  of  creation,  and  as  confidently 
as  upon  the  evidence  of  the  senses  concerning  presently  transpir- 
ing events.  Thus  far  the  matter-of-fact  philosophy  protrudes  itself 
into  the  deductive.  It  gets  to  be  the  a  posteriori  by  following  the 
a  priori  through  the  whole  length  and  breadth  of  its  unquestion- 
able teachings.  Inquiry  in  the  system  of  physical  things,  directed 
by  the  senses,  in  every  last  analysis  runs  aground  upon  ultimate 
facts,  beyond  which  inductive  reasoning  cannot  go.  Its  founda- 
tion is  in  its  ignorances,  and  its  philosophy  is  a  science  of  appear- 


ances. 


D.  Considering  the  triumphs  that  the  a  posteriori  method  has 
won  in  the  world  of  physics,  you  limit  its  province  and  its  capabili- 
ties surprisingly. 

T.  No  ;  I  leave  to  the  philosophy  of  materialism  all  its  proper 
liberty  and  legitimate  authority — the  whole  range  of  natural 
phenomena  that  the  visible  creation  offers  to  observation  ;  but  the 


84  POLITICAL  ECONOMY. 

central  and  supreme  truths  of  things  lie  quite  out  of  the  reach  of 
observation  and  experiment.  The  senses  cannot  compass  them. 
They  do  not  centre  amid  "  the  things  that  do  appear."  Their 
lines  of  induction  focalize  in  the  absolute, — the  designs  of  the 
Creator.  Design,  otherwise,  final  causes,  connects  the  end  with 
the  beginning,  and  therein  alone  is  to  be  found  the  efficiency  and 
dependency  of  cause  and  effect.  All  the  potency  which  we  ascribe 
to  material  things  is  an  influx  of  apportioned  omnipotence. 

P.  I  understand  you  to  mean  that  the  inductive  system,  ex- 
cluding any  other  data  in  its  service  than  those  which  the  senses 
discern,  is  not  the  sole  rule  of  investigation  or  directory  in  judg- 
ment. You  do  not  believe,  with  Aristotle,  that  "  there  is  nothing 
in  the  intellect  which  was  not  previously  in  the  senses  ;"  or,  with 
Locke,  that  "  all  ideas  of  reflection  are  formed  from  ideas  of  sen- 
sation." 

T.  No  ;  we  have  ideas  and  ideals,  that  come  not  from  observa- 
tion or  experience.  Our  intellectual  and  moral  faculties  are 
equipped  with  innate  activities  that  have  no  patterns  in  the  per- 
ceptions of  outside  things,  or  in  any  possible  modifications  of 
them.  The  mind  and  feelings  have  instincts,  just  as  our  bodies 
have.  Our  intuitions  and  inspirations  are  not  bora  of  our  experi- 
ence. 

The  inductive  system  abused — pushed  beyond  the  boundary  as- 
signed to  it  by  Bacon,  and  forced  into  a  province  of  knowledge  of 
which  it  is  wholly  incapable,  has  made  wretched  failures  in  ethics, 
politics,  jurisprudence,  education,  psychology,  theology — in  what- 
ever is  in  its  nature  metaphysical  or  supra-physical. 

D.  Is  the  law  of  cause  and  effect  an  insufficient  directory  in 
the  explorations  of  natural  philosophy  ? 

T.  Reflect.  You  are  speaking  of  the  connection  subsisting 
between  second  causes,  in  exclusion  of  the  primum  mobile,  or  first 
cause,  in  which  alone  power  abides. 

P.  I  cannot  anticipate  the  application  of  your  method  of  in- 
quiry in  the  region  of  mixed  material  and  vital  phenomena  to  the 
question  in  hand. 

T.  It  authorizes  the  logical  basis  of  design  in  the  creation  as  a 
starting  point  for  discussion,  which,  as  it  concerns  our  present  sub- 


POPULATION.  85 

ject,  may  be  embodied  in  this  proposition :  The  power  of  repro- 
ducing life  is  in  inverse  proportion  to  the  poioer  of  maintaining  it . 
In  evidence :  The  insects  of  a  day  are  produced  in  myriads. 
The  animals,  whose  span  of  life  is  reduced  to  half  a  dozen  years, 
are  limited  to  hundreds  of  offspring.  The  higher  grades,  that  live 
a  score  or  more  years,  are  in  proportion  less  prolific.  Birds  and 
beasts  that  outlive  our  threescore  and  ten,  add  their  evidence  to 
the  rule  and  its  examples  of  a  proportionately  diminished  fertility 
in  the  reproduction  of  their  kind.  This  is  the  law  as  it  obtains 
among  various  species  of  animated  creatures.  It  provides  for  the 
continuance  of  races,  and  for  the  casualties  to  Avhich  they  are 
respectively  subject.  So  we  find  the  law  of  their  existence  in  its 
Design.  I  suppose  that  no  one  imagined  that  such  abridgment  of 
their  terms  of  life  has  been  interposed  to  correct  a  natural  fecun- 
dity beyond  the  provision  made  for  their  subsistence  !  Absolute 
Atheism  could  not  logically  go  so  far.  Even  if  creation  was  evolved 
by  the  innate  forces  of  matter,  its  functions  must  conform  to  its 
necessities,  else  it  would  run  into  the  confusion  of  chaos  ;  order 
would  be  impossible  ;  it  could  not  take  the  form  and  movement  of 
system,  and  could  not  be  the  subject  of  science. 

I).  You  have  said  that  the  inferior  classes  of  animals  are  born 
into  the  order  of  their  lives,  and  are  deprived  of  liberty,  except  in 
the  degree  required  for  accommodation  to  the  exigencies  of  their 
existence  and  uses  ;  and  you  have  refused  to  admit  analogies 
between  subjects  unlike  in  their  nature  and  offices. 

T.  Very  true  ;  but  in  this  case  I  have  not  pressed  the  argu- 
ment beyond  the  intrinsic  evidence.  A  general  law  rules  among 
and  over  subordinate  variations.  Scientific  classification  admits 
species  and  genera.  Their  definitions  being  strictly  regarded, 
reasoning  upon  them  is  just  and  safe. 

D.  But  our  problem  is  the  application  of  your  proposition  to 
the  life  tenure  of  the  human  race  through  all  its  accidents. 

T.  Well,  let  us  see  whether  we  can  carry  the  law  in  its  mani- 
fest operation  into  the  history  of  human  life  : — 

In  the  savage,  or  barbarous  stages  of  society,  and  in  the  earlier 
stages  of  what  we  call  civilization — in  all  periods  of  disorder,  past 
and  present — the  mortality  of  the  race  in  early  life  is  fearfully 
large.     The  bills  of  mortality  report  for  our  principal  cities  the 


86  POLITICAL  ECONOMY. 

one-third  of  the  deaths  as  occurring  under  the  age  of  twenty  years, 
and  the  newspapers  record  crimes  against  life  and  property,  sum- 
maries of  pauperism,  instances  of  destitution,  asylums  for  the  sick, 
the  blind,  the  insane,  that  seem  to  overtask  the  most  active  reme- 
dial benevolence,  and  to  demonstrate  a  terrible  deficiency  of  pro- 
vision among  the  unfortunates  of  the  masses.  From  such  stagnant 
puddles  as  these  it  is  easy  to  fish  up  facts,  by  the  theorists  of  dis- 
proportion, to  countenance  their  speculations.  But  these  facts,  so 
far  as  they  show  their  meaning,  prove  our  proposition, — the  pro- 
duction of  life  is  always  in  an  inverse  proportion  to  the  provision 
for  its  maintenance.  It  holds  its  purpose  through  disorder,  and 
endeavors  to  inaugurate  its  normal  harmony.  The  whole  of  natu- 
ral history  demonstrates  the  rule  that,  where  mortality  is  largest, 
fecundity  is  greatest.  It  is  a  shield  like  that  of  the  fable,  that  has 
two  sides  for  opposing  knights  to  fight  about,  and  the  matter  of 
debate  is  simply  this, — is  the  provision  of  food  defective,  or  is  the 
existing  rate  of  increase  of  population  an  abuse  capable  of  correc- 
tion, and  tending  to  a  harmony  of  demand  and  supply  ?  The  facts 
to  be  considered  are  broadly  contrasted  in  the  excessive  fertility 
of  the  drudges  of  Europe  and  of  the  slaves  of  America  on  the  one 
side,  and  the  less  fertility  of  the  highest  grade  of  society  every- 
where on  the  other. 

P.  At  the  Scott  centenary  celebration  Lord  Houghton  said  of 
the  world's  litterateurs,  that  they  seldom  leave  descendants.  Eng- 
land has  no  Shakspeare,  no  Milton,  no  Bacon,  no  Newton,  no 
Pope,  no  Byron ;  Italy  has  no  Dante,  no  Petrarch,  no  Alfieri,  no 
Ariosto;  Germany  has  no  Goethe,  no  Schiller,  no  Heine;  France 
has  no  Montaigne,  no  Voltaire,  no  Descartes.  Of  the  men  and 
women  of  great  intellectual  activity  who  have  left  no  descendants 
the  list  is  long  enough  to  establish  the  rule.  The  whole  number 
of  names  on  the  roll  of  the  Peers  of  Great  Britain  and  Ireland  in 
A.  D.  1873  was  473,  more  than  two-thirds  of  whose  titles  were 
created  in  the  present  century.  There  are  now  extant  of  the 
peerages  of  the  16th  century,  only  12;  of  the  17th,  35;  of  the 
18th,  95;  no  more  than  three  date  from  the  latter  part  of  the 
13th  century. 

D.  There  are  exceptions  to  all  rules. 

T.  There  are  no  exceptions  to  true  rules.     Especially  there 


POPULATION.  87 

are  none  to  the  rules  which  are  the  laws  of  nature.  Exceptions 
contradict  and  disprove  rules.  What  they  do  prove  is  the  falsity 
of  the  rules  that  admit  them. 

But  I  have  something  to  propose  now,  that  meets  the  question 
directly,  after  the  manner  and  under  the  requirements  of  the  mat- 
ter-of-fact philosophy :  It  is  found  in  the  established  laws  of  the 
human  organism.  The  evidences  of  our  doctrine  fall  into  three 
propositions  familiar  to  ordinary  experience  : 

1st.  The  nervous  apparatus  of  the  various  species  of  creatures, 
and  of  the  various  individuals  of  each  species,  vary  with  their 
respective  capabilities  of  maintaining  life — largest  as  they  are 
longer-lived  and  more  highly  endowed. 

2d.  Fecundity  is  given  in  inverse  proportion  to  the  development 
of  the  nervous  system — the  largest  least  and  the  smallest  most 
prolific.  This  observation  holds  from  insects  up  to  elephants,  and 
in  measure  all  the  way  up  the  ascent  from  the  lowest  to  the  high- 
est grade  of  intelligence  of  kinds  and  individuals. 

3d.  Unequal  and  partial  distribution  of  the  total  vital  force 
among  the  organs  and  functions  of  the  frame,  maintained  perma- 
nently, must  be  at  the  expense  of  those  that  are  thrown  out  of 
use. 

D.  I  am.  not  sufficiently  skilled  in  physiology  to  put  these  posi- 
tions to  the  question. 

T.  Instances  familiar  to  common  observation  will  answer  for 
proof.  A  good  class-book  upon  comparative  physiology  will 
establish  my  first  proposition ;  but  I  need  not  insist  upon  either 
this  first,  or  even  upon  the  second  that  I  have  given,  for  the  sake 
of  symmetry  and  completeness  in  the  chain  of  evidences.  The 
truth  of  the  last  fully  covers  the  preceding  two.  This  third 
proposition  needs  no  other  proof  than  its  clear  statement.  If  the 
sum  total  of  the  vital  powers  has  any  limit,  the  concentration  of 
the  individual's  energy  upon  one,  or  one  set  of  organs,  must  be 
effected  by  a  diversion  of  activity  from  others.  We  see  this  in 
fevers  where  the  excitement  of  the  nervous  and  circulating  sys- 
tems is  inordinately  great,  and  the  muscular  and  digestive  func- 
tions are  proportionately  diminished  or  suspended.  The  same 
thing  is  true  of  every  morbid  state  involving  the  frame  more  or 
less  generally.     Disease  has  been  well  described  as  a  broken  bal- 


POLITICAL  ECONOMY, 


ance  of  excitement.  But,  directly  to  our  purpose,  inequality  in 
the  distribution  of  vital  power  is  almost  constantly  exhibited  in 
conditions  quite  compatible  with  general  health.  It  occurs  in  all 
instances  of  intense  occupation.  We  do  not  always  look  and  per- 
ceive when  we  see  ;  nor  listen  and  perceive  what  we  hear.  In- 
tense attention  to  one  thing  forces  inattention  to  others.  In  cases 
of  permanent  concentration,  where  the  fixity  amounts  to  a  habit, 
excluded  offices  of  the  body  and  of  the  mind,  dependent  upon  the 
organs  which  it  employs,  fall  into  incapacity  by  continued  disuse. 
The  first  deduction  to  be  drawn  from  facts  so  obvious  as  these, 
is  that  no  fixed  and  invariable  quantity  of  action  or  of  results  can 
be  predicated  of  any  one  or  other  of  the  distinct  organic  struc- 
tures in  the  living  body  ;  much  less  can  the  highest  possibility  of 
any  one  be  taken  as  the  common  or  average  measure  of  ability 
in  all  times,  places,  and  circumstances,  as  the  constant  quantity  of 
the  Malthusians  unwarrantably  assumes. 

I).  I  see  the  drift  of  the  limitation  of  vital  force  in  individuals, 
and  of  the  unequal  distribution  of  action  among  the  animal  func- 
tions. The  theory  is  so  new  in  application  to  the  subject  under 
consideration,  that  I  would  like  to  have  it  further  developed. 

T.  The  trial  of  the  doctrine  tested  by  facts  must  be  very 
briefly  given :  , 

That  there  is  no  uniformity,  no  constancy  of  results  in  the 
growth  of  population  in  the  races,  classes,  and  individuals  of 
society,  is  apparent  to  observation,  and  proved  in  history.  The 
whole  range  of  the  phenomena  indicates  a  constitutional  antago- 
nism of  action  between  the  generative  and  nervous  forces,  with 
very  great  modifications  of  effect.  For  example  :  There  is  little 
antagonism  between  muscular  and  brain  power  where  the  latter  is 
comparatively  inactive,  as  in  the  drudges  of  the  unskilled  indus- 
tries. The  higher  human  endowments,  the  moral  and  intellectual 
faculties,  directly  employing  the  brain  and  the  external  senses 
in  great  activity,  seem  to  be  the  special  antagonists  of  the  pro- 
creative  function. 

D.  You  are  getting  upon  delicate  ground;  but  I  am  glad  to 
have  you  upon  terra  fir  ma. 

T.  Truth  and  use  are  the  only  clothing  that  innocence  needs. 
Swedenborg    happily    illustrates    the    influence    of    receptivity. 


POPULATION.  89 

Travelling  in  the  spirit-world  one  day,  he  asked  his  angel 
guide  to  pluck  for  him  a  bunch  of  figs.  When  he  tasted  them 
he  complained  that  he  had  got  grapes  instead.  The  angel  replied, 
"I  gave  you  figs,  but  you  took  grapes."  Upon  a  perverting  pal- 
ate sweetness  turns  sour. 

To  pursue  the  facts  and  learn  their  meaning — it  is  to  be  noted 
that  where  the  animal  prevails  over  the  intellectual  and  the  moral, 
and  in  proportionate  degree,  fecundity  increases;  teaching,  that 
the  remedy  for  excess  of  population  is  not  in  this  or  that  kind 
of  food,  in  its  abundance  or  scarcity,  but  in  the  duly  balanced 
activity  of  the  perceptive,  the  intellectual,  and  the  moral  functions 
of  the  brain  and  nerves.  Such  cultivation  and  employment  of  all 
the  powers  of  body  and  mind  as  will  secure  their  equilibrium  will 
correct  disproportion  either  of  defect  or  excess  in  any  of  them. 
Evils  resulting  from  conduct  are  abuses,  and  nothing  else.  Obe- 
dience to  law  is  their  prevention,  infinitely  better  than  curative 
treatment,  which,  by  the  way,  is  generally  mere  quackery. 

P.  The  law  of  balance  and  counter-balance  governing  the  ner- 
vous functions  must  have  application  as  wide  and  varied  as  the 
manifestations  of  the  vital  powers. 

T.  It  rules  in  the  philosophy  of  history  and  contemporarv 
observation,  and  it  has  an  outlook  of  prophecy  in  it. 

D.  There  are  points  in  the  history  of  the  North  American 
Indians  that  puzzle  me,  if  I  must  accept  your  explanation  of  tl.e 
brutal  fecundity  of  slaves  and  other  industrial  drudges.  These 
Indians  are  ignorant  and  indolent,  enough  to  make  them  slaves  of 
the  lowest  forms  of  animal  indulgence,  and  besides,  are  under  very 
slight  moral  restraints. 

T.  You  have  not  finished  their  description.  These  Indians  are 
hunters,  followers  of  Diana,  the  goddess  of  the  chase  and  of  chas- 
tity— a  significant  combination.  They  are  as  broadly  distin- 
guished from  the  lowest  class  of  civilizees  in  habits  and  occupation 
as  in  fecundity.  They  have  a  fiery,  nervous  temperament,  they 
are,  withal,  stoics  in  endurance,  indomitable,  fanatical,  abso- 
lute in  will-power.  Their  fastings  are  as  fearful  as  their  feastings  ; 
they  go  from  ungoverned  indulgence  to  the  extreme  of  abstinence  ; 
they  are  wilful,  proud,  arrogant,  brave,  revengeful;  they  are  the 
chivalry  in  rough ;  they  are  the  men  who  do  die  in  the  last  ditch ; 
7 


90  POLITICAL   ECONOMY. 

desperate  in  assault,  cunning  in  defence,  alive  to  their  point  of 
honor,  and  never  unreflective,  however  devilish  in  hattle  or  ruth- 
less in  victory.  They  are,  besides,  eloquent  though  illiterate,  and 
are  in  brain-power  incomparably  beyond  the  ignorant  of  other 
races.  In  their  character  there  is  nothing  infantile ;  it  is  mon- 
umental of  past  greatness  in  decay.  All  this  indicates  cerebral 
and  nerve  force  that  removes  them  world-wide  from  the  unthinking 
and  unreflecting  hordes  of  men  under  the  yoke  of  civil  domina- 
tion and  social  degradation.  Slave  implies  privation  and  depra- 
vation; savage,  applied  to  this  race,  means  the  wild  liberty  of 
unshackled  impulse. 

The  hunter  life  demands  vigilance,  alertness,  sharpness  of 
attention,  of  perception  and  reflection,  which  draw  largely  upon 
the  nerves  of  the  senses,  and  the  coordinating  agency  of  the 
brain.  Perpetual  inter-tribal  warfare  and  individual  duelling  is 
another  heavy  drain  upon  the  nervous  system.  Their  whole  life, 
in  its  practical  bearings,  with  the  unattractive  condition  and  char- 
acter of  the  subordinate  sex,  is  extremely  unfavorable  to  the 
intersexual  affections.  So  understood,  they  are  not  an  exception,^ 
but  a  striking  example  of  the  counterpoise  of  the  passions. 

I),  I  would  not  be  captious  ;  but  I  cannot  help  suggesting  that 
there  are  a  vast  number  of  cases  which  do  not  seem  to  conform  to 
your  doctrine. 

T.  I  think  there  is  proof  enough  to  establish  it,  if  the  appa- 
rently refractory  instances  were  disposed  of.  To  these  seeming 
exceptions,  for  want  of  understanding  them,  I  can  only  reply  that 
the  physical  and  mental  conditions  of  parentage  are  but  seldom 
known,  indeed,  are  scarcely  discoverable.  Medical  science  is 
very  far  from  fathoming  the  mysteries  of  procreation.  To  know 
them  thoroughly  would  be  to  put  them  within  the  power,  and  sub- 
ject to  the  caprices  that  would  lead  to  terrible  abuses.  The  Mas- 
ter of  Life  has  not  delegated  such  vice-regal  authority  here  as  he 
has  over  dead  matter  and  its  issues.  It  would  not  be  wise  or 
prudent  in  Providence  to  put  into  our  hands  an  absolute  govern- 
ment of  life,  death,  and  immortality.  We  can  know  enough  of 
their  springs   of   action    ['or  our  necessary   use.     We   must   stop 

there. 

I).    So,  we  must  leave  proofs  and  exceptions  to  make  their  own 
compromises,  on  the  mound,   1   suppose,  that   believers   are  not 


POPULATION.  91 

bound  to  explain  away, or  to  surrender  to,  apparent  incompatibilities 
which  neither  they  nor  anybody  else  understand.  You  have  still 
something  further  to  urge,  perhaps,  as  usual,  how  the  faith  in  a 
social  principle  works  upon  the  hope  and  the  charity  of  human 
fortunes. 

T.  The  prospective  operation  of  this  principle  or  law  of  counter- 
poise in-functional  inter-action  of  the  nervous  powers  is  an  attractive 
claim  upon  our  belief  in  it.  Its  promised  issue  in  the  amelioration 
of  the  fortunes  of  men  is  not  too  good  to  be  true  ;  it  is  too  good 
to  be  untrue.  Moreover,  it  offers  an  exploring  and  explanatory 
light  into  the  existing  disorders  and  their  remedies.  How  is  the 
disturbed  balance  between  demand  and  supply  to  be  restored  ?  A 
satisfactory  answer  will  be  found  in  the  tendencies  of  the  forces  at 
work  under  the  government  of  the  law,  thus  : 

The  changes  in  the  forms  and  kinds  of  labor  that  are  already  in 
operation,  and  advancing  with  accelerated  rapidity,  promise  a  more 
and  more  complete  substitution  of  artificial  for  natural  labor.  This 
modification  of  the  agencies  of  industrial  production,  while  it  pro- 
vides a  widening  employment  of  the  varied  capabilities  of  men  and 
women,  will  be  attended  by  a  constantly  increasing  release  from 
drudgery,  substituting,  all  along,  art  and  skill  and  thought  for 
mere  muscular  force  in  its  ruder  forms  ;  and,  so,  mingling  mind 
with  matter  will  become  educational,  developing,  while  employing 
the  brain  and  nervous  system,  and  thus  more  and  more  effectively 
counterpoising  the  lower  animal  impulses.  It  is  among  the  masses 
of  the  people,  the  indistinct  individuals  of  the  lowest  class,  that 
the  remedy  is  most  needed  ;  and  here,  we  have  in  the  very  labors 
which  they  must  pursue  the  opportunity  and  means  for  the  happy 
working  of  this  law  of  betterment.  The  process  is,  mind,  ever 
more  largely  mixed  with  sinew  in  the  production  of  the  commodi- 
ties of  the  labor  market.  Horses  grow  more  valuable  as  they  are 
released  from  the  draught  of  freight  and  raised  to  finer  and  higher 
service;  so,  men  and  women  remitted  from  the  lower  to  the  hio-her 
forms  of  labor  become  of  more  value  to  themselves  and  to  the 
world. 

We  look  now  for  better  and  better  diffused  intellectual  educa- 
tion in  the  future,  in  the  confidence  which  the  present  over  the 
past  inspires.  Another  source  of  brain  development  and  an 
effective  addition  to  its  counter-balancing  power : — Shall  we  have 


92  POLITICAL    ECONOMY. 

an  improved,  a  scientific  agriculture,  involving  both  animal  and 
vegetable  physiology  and  chemistry,  practically  applied,  with 
something  of  meteorology  added  ;  helping  on  the  one  side  to  re- 
plenish the  stores  of  sustenance ;  and,  on  the  other,  through  intel- 
lectual improvement,  to  restrain  the  excess  of  requirement  where 
it  generally  occurs  ? 

Again — do  we  look  for  a  progressive  improvement  in  the  morals 
of  the  masses,  and  a  corresponding  amendment  in  the  administra- 
tion of  social,  civil,  and  inter-national  justice  ?  This  promise,  also, 
carries  the  double  aspect  of  correction  in  the  aggregate  demand 
of  the  consumers  and  in  the  economy  of  consumption.  Moral  re- 
finement will  give  the  required  supremacy  of  the  man  proper  over 
his  insurgent  animalism  ;  and,  its  prevalence  will  at  the  same  time 
check  the  waste  of  war,  the  misdirection  of  industry,  by  changing 
the  abuse  of  its  products  into  their  proper  use,  from  agents  of 
death  to  provisions  for  life.  In  a  thousand  ways  the  future, 
growing,  as  the  present  has  grown  upon  the  past,  presents  itself 
in  expectation  as  a  restorer  of  that  equilibrium  among  the  activi 
ties  of  the  human  organism,  on  which  depends  a  due  adjustment 
of  the  living  man's  requirements  to  the  material  things  appointed 
to  sustain  him. 

D.  But  still  the  prevalent  disharmony,  which  you  admit,  calls 
for  some  explanation  consistent  with  the  alleged  beneficence  of 
terrestrial  arrangements.  How  do  you  meet  the  incongruity  of 
the  course  toward  the  goal  at  which  it  is  destined  to  arrive  ? 

T.  Perhaps  there  is  a  rude  harmony  discoverable  now  in  what 
seems  to  deny  it.  The  Malthusians  regard  the  prevailing  prema- 
turity of  death,  in  the  present  and  past  disordered  conditions  of 
society,  as  a  remedy  for  an  excessive  production  of  life.  That  is 
the  meaning  of  their  preventive  and  corrective  checks — abstinence 
from  marriage,  war,  pestilence,  and  famine — all  of  them  murder- 
ous in  operation  as  in  intention.  But  suppose  we  take  the  opposite 
ground,  and  see  in  the  casual  and  partial  excess  of  life  a  provision 
to  meet  and  supply  its  waste  in  conditions  which  tend  rather  to 
extinction  than  to  repletion  and  plethora.  Surely  the  problem 
turns  two  sides  into  the  debate.  The  burden  of  reconciling  the 
ways  of  God  to  man  falls  upon  those  who  find  such  contradictions 
in  the  policy  of  the  terrestrial  economy. 


WAGES,    PROFITS,    AND    INTEREST.  93 

A  summary  of  the  conclusions  from  the  law  of  population,  as 
we  understand  it,  may  be  put  compactly  into  this  form  :  The  waste 
of  human  life  in  the  past,  and  continuing;  in  the  present,  is  due  to 
an  abnormal  preponderance  of  the  animal  over  the  intellectual  and 
moral  faculties. 

That  waste  is  not  the  corrective  of  a  blunder  in  the  system  of 
the  Creator,  but  results  from  an  abuse  of  the  reproductive  func- 
tion ;  and  its  casual  excess  is  a  provision  for  the  waste  incident  to 
a  broken  balance  in  the  system  of  human  functions. 

Population  is  self- regulative.  In  the  organic  offices  of  the 
human  constitution  there  is  a  persistent  effort,  with  a  promised 
success,  in  the  establishment  of  an  equilibrium  in  the  action  of  the 
individual  propensities,  and  resultingly  in  an  adjustment  of  supply 
and  demand  between  sustenance  and  requirement  in  the  relations 
of  man  and  earth. 

The  moral  of  this  theory  is  healthy,  happy,  holy,  and,  therefore, 
it  is  true. 


CHAPTER  X. 
WAGES,  PROFITS,  AND  INTEREST. 

T.  Having  discussed  the  sources  of  wealth,  the  law  of  popula- 
tion, and  the  capability  of  the  earth  to  supply  sustenance  to  its 
inhabitants,  we  are  next  concerned  to  see  what  provision  there  is 
in  the  order  of  human  affairs  for  the  distribution  of  the  products 
of  industry  among  the  several  agents  engaged  in  the  world's  work. 

I).  J.  B.  Say  treats  the  causes  and  movements  of  wealth  in 
categories  equally  symmetrical,  comprehensive,  and  exhaustive  ; 
happily  expressed  as  "The  Production,  Distribution,  and  Con- 
sumption of  Wealth."  It  strikes  me,  however,  that  you  do  not 
adopt  his  formula,  or  provide  for  its  method  in  the  plan  of  our 
studies. 

T.  No  ;  because  I  do  not  accept  it.  I  was  delighted  with  it 
when  first  I  met  it  on  the  title-page  of  his  treatise.  It  seemed 
so  clear,  so  logical  and  complete:   another  "Rule  of  Three,"  like 


94  POLITICAL   ECONOMY. 

» 

that  of  proportion  in  arithmetic,  that  it  promised  a  methodical  and 
well-balanced  system  of  study,  by  which  the  understanding  could 
work  out  all  the  problems  in  its  domain,  as  surely  and  exactly  as 
clockwork  measures  the  minutes  of  time,  and  announces  their  sum- 
maries "  as  clear  as  a  hell."  It  promised  to  flash  like  an  electric 
spark  through  the  muddle  of  matters  requiring  analysis,  to  make 
every  element  in  the  chaotic  mass  dance  up  to  its  partner,  and  to 
organize  all  the  individualities  into  clusters  of  classification,  and 
so  produce  a  science  of  the  uncertainties  which  perplexed  me. 
I  had  not  a  doubt  that  it  pigeondioled  the  puzzles  of  history,  phi- 
losophy, and  the  affairs  of  practical  economy,  as  in  a  cabinet  of 
curiosities,  ordered  and  methodized  in  the  form  of  a  working 
theory. 

D.  It  seems  to  me  that  you  expected  too  much  from  the  pro- 
gramme of  the  title-page  ;  and  would,  therefore,  judge  too  severely 
the  answering  treatment  in  the  body  of  the  book.  For  which  I 
am  prepared  by  the  irony  not  entirely  concealed  in  the  report  of 
your  first  impressions. 

T.  I  was  young  in  the  study  ;  and  I  wras  too  hopeful,  be- 
cause I  was  so  hungry  for  the  promised  truths  ;  I  believed  the 
promise  fulfilled,  the  revelation  oracular,  the  book  of  interpreta- 
tion scaled,  and  all  the  subject-matters  finally  disposed  of.  But 
from  this  unquestioning  acceptance  there  soon  arose  dissentients. 
The  school  began  rehearsals,  expositions,  and  illustrations  ;  col- 
lege professorships  were  established  ;  political  economy  became  a 
branch  of  the  higher  education  ;  thence  came  a  crowd  of  sects 
under  the  common  confession  of  faith,  making  a  mixture  of  doc- 
trines, and  a. scattered  collection  of  believers  who  do  not  believe 
each  other. 

I).  You  are  sweeping  with  a  new,  a  very  new  broom,  so  that 
one  can  see  nothing  clearly  through  the  dust  that  you  raise. 

T.  Raising  a  dust  is  the  way  to  scatter  it.  The  title  of  Say's 
treatise  is  a  definition,  a  summary  table  of  contents.  In  logic  a 
definition  is  such  a  description  of  a  thing  as  includes  all  that  be- 
longs to  it,  and  excludes  everything  that  does  not  belong  to  it. 
Now  look  at  his  fascinating  formula — Production,  Distribution, 
Consumption — a  complete  circle  of  movement  ending  in  its  begin- 
ning, going  out  at  the  same  hole  it  came  in  at.     Consumption  is 


WAGES,    PROFITS,    AND    INTEREST.  95 

not  destruction  or  annihilation.  Its  economic  meaning  is  repro- 
duction ;  it  is  use,  which  is  a  very  different  thing  from  destruction. 
Ore  is  not  destroyed  when  it  is  consumed  in  the  production  of  iron  ; 
food  is  not  destroyed  when  it  is  converted  into  bone  and  muscle. 
I  need  not  multiply  instances.  Matter  is  indestructible.  In  every 
form  of  consumption  there  is  only  conversion.  Say's  third  cate- 
gory is  exactly  his  first  over  again.  His  triad  of  terms  is  thus 
reduced  to  a  duad,  and  the  last  of  them  goes  to  the  deuce. 
D.  You  do  not  object  to  the  colloquial  use  of  the  word. 
T.  Not  at  all.  I  object  to  the  limited  meaning  given  to  it  in 
logical  description.  Say  never  gives  the  word  Consumption  the 
proper  or  any  force  of  reproduction.  His  entire  definition  of  the 
agents  and  movements  of  wealth  is  lame  in  its  primary  proportion, 
and  limps  through  the  whole  course  of  discussion.  Owing  to  this 
fault  his  followers  have  easily  converted  his  system  into  a  science 
of  exchange — a  huckster's  philosophy — and  so  it  must  be  if  the 
economic  agencies  end  in  consumption  not  regarded  as  repro- 
duction. 

P.  You  leave  in  the  definition  only  two  categories — production 
and  distribution. 

T.  My  objection  to  it  goes  still  further,  when  used  as  the  school 
employs  and  limits  the  proper  range  of  the  word  distribution,  by 
which  they  mean  nothing  but  exchange  of  commodities  in  the 
market,  never  a  due  distribution  of  values  among  the  several  pro- 
ducers and  contributors. 

D.  I  cannot  yield  this  point,  so  stated,  without  some  proof. 
T.  The  first  testimony  to  the  charge  that  "  distribution,"  in  the 
meaning  of  the  generally  accepted  and  common  use  of  the  theorists 
of  the  Say  school,  does  not  intend  division  of  products  or  their 
values  between  capitalists  and  laborers,  and  embraces  nothing  but 
the  merchant  function  with  its  subsidiary  agencies,  is  distinctly 
declared  by  Blanqui,  who  is  an  orthodox  disciple  of  Say.  I  quote 
him :  "  The  subjects  which  affect  us  so  nearly  at  present,  such  as 
Wages  and  Population,  seem  scarcely  to  affect  him  (J.  B.  Say). 
He  has  considered  production  far  too  independently  of  the  pro- 
ducers. He  was  seduced  by  the  prodigies  of  English  production, 
and  did  not  think  of  the  human  suffering  which  follows  in  its  train. 


96  POLITICAL   ECONOMY. 

He  looked  upon  wages  as  sufficient,  not  because  they  enabled  the 
laborer  to  live,  but  because  they  kept  him  from  dying." 

/>.  Do  you  mean  that  this  question  is  entirely  ignored  by  the 
writers  whose  works  fill  the  libraries  of  our  colleges,  and  crowd 
the  shelves  of  our  students,  scholars,  and  statesmen  ? 

T.  I  do  not  say  that  they  never  advert  to  the  subject,  for  I  have 
already  recited  a  striking  and  startling  reference  to  it  in  the  criti- 
cism of  a  capable  and  sincere  admirer  of  the  Treatise  of  the  Great 
Apostle  of  the  Faith.  Let  me  give  you  another  oracle  :  Ricardo, 
of  at  least  equal  renown  with  J.  B.  Say,  in  his  "  Principles  of 
Political  Economy,"  defining  the  natural  price  of  labor,  says:  "It 
is  that  price  which  is  necessary  to  enable  the  laborers,  one  with 
another,  to  subsist  and  perpetuate  their  race  without  increase  or 
diminution." 

There  you  have  it,  plump  and  plain.  The  fundamental  princi- 
ples of  Say,  Ricardo,  Mill,  McCulloch,  Whately,  Chalmers,  and 
their  American  disciples  issue  legitimately  in  the  like  result. 
Their  theory  of  wages  accords  just  the  care  and  provision  for  the 
animate,  that  it  does  for  the  inanimate,  machines  in  production. 
Partnership-right  in  the  commodity  produced  is  not  admitted. 
Wages,  the  natural  wages  of  this  philosophy,  repi'esents  the  share 
given  to  the  steam-engine,  wood,  water,  and  repairs — so  long  as 
the  thing  is  worth  its  feed  or  fuel  and  repairs.  Chattel  slavery  is 
the  ownership  by  the  master  of  the  body,  and  so  much  of  the  mind 
of  the  slave  as  is  necessary  to  work  the  machine,  subject  to  the 
incumbrance  of  maintaining  the  life  and  powers  of  the  chattel  in 
sickness  and  health,  through  infancy  and  old  age.  This  economic 
theory  of  wages  relieves  the  employer  of  all  such  ministries  in 
misfortune,  and  of  all  responsibility  for  the  incidents  of  the  bar- 
gain. 

I).  This  is  revolting.  The  honored  names  which  you  have 
quoted  for  such  an  issue  of  their  theories  did  not  intend  the  in- 
humanity logically  chargeable  against  their  speculations ;  and 
there  must  have  been  protests,  clear  and  strong,  recorded  against 
them. 

T.  Yes,  there  are  dissentients,  men  of  great  weight  intellectually 
and  morally,  greater,  I  think,  than  those  whom  they  confronted  in 
the  field  of  speculative  investigation  ;  but  they  are  not  among  the 


WAGES,    PROFITS,    AND    INTEREST.  97 

current — do  let  me  say,  the  vulgarly  popular  authorities:  such 
men  as  Sismondi,  Rossi,  Droz,  Blanqui,  and  Bishop  Berkeley,  and 
I  do  not  hesitate  to  add  St.  Simon  and  Fourier.  Of  these  men 
and  their  views  of  economic  laws  the  common  people  never  hear, 
and  their  works  are  all  but  strangers  to  the  students  in  our  institu 
tions  of  learning. 

There  is,  however,  another  form  and  force  of  protest.  It  is 
heard  in  the  conventions  of  laborers  and  strikers,  in  language 
neither  formal  nor  scientific,  nor  always  wise  nor  wholly  just.  It 
is  in  the  civil  insurrections  working  like  an  earthquake  among  the 
toilers,  angry  at  their  wrongs.  With  these  are  joined  the  idlers 
who  are  busy  stirring  up  the  mud  in  the  troubled  waters  ;  and, 
through  the  confusion  of  the  wrangle  is  heard,  not  infrequently  or 
ineffectually,  the  voice  of  the  benevolent  and  considerate,  who  are 
attentive  to  the  signs  of  the  times. 

I  do  not  impeach  the  opinions  or  purposes  of  either  of  the  parties 
to  the  great  strife  ;  I  do  not  hold  the  insurgents  inexcusable  for 
the  unwarrantable  or  the  unwise  in  their  manner  of  acting,  I  am 
only  answering  your  question. 

P.  Is  there  no  known  economic  law  looking  to  justice,  peace, 
and  hope,  and  promising,  if  not  already  effecting,  order  in  the 
movements  of  the  commonwealth  ? 

T.  A  general  answer  to  your  question  is  found  in  the  manifest 
progress  of  society  all  the  way  up  from  savageism  to  the  highest 
civilization  attained.  Some  law  or  laws  must  have  been  working 
the  amelioration  in  the  condition  of  the  masses  that  their  history 
exhibits.  In  the  savage  state  things  are  so  far  common  to  all  that 
the  allotment  and  title  to  property  are  determined  by  the  simple 
act  of  appropriation  and  the  power  and  will  to  hold  possession.  In 
this  condition  there  is  no  such  permanency  of  ownership  as  gives 
rise  to  a  class  of  capitalists,  and  to  the  reciprocal  class  of  laborers  at 
wages.  There  is  no  system  of  progressive  accumulation.  Pro- 
vision for  use  is  a  hand-to-mouth  system  of  property.  There  being 
no  surplus  of  production  reserved,  there  is  no  industrial  enterprise 
and  improvement,  in  our  sense  of  the  phrase.  Where  there  is 
nothing  of  capital  and  wages  in  the  relations  of  men,  there  are 
none  of  the  inequalities  of  property,  and,  none  of  its  possibilities  of 
better  things  to  come. 


98  POLITICAL   ECONOMY. 

Civilization  grows  through  barbarism  and  all  its  own  earlier 
stages  till  capital  and  labor  attain  a  defined  order,  founded  in 
expediency,  near  enough  to  natural  right  to  admit  and  promote 
social  and  individual  progress,  but  allowing  great  inequality  in 
the  condition  of  the  joint  contributors  to  the  mass  of  the  general 
wealth.  But  a  just  and  wise  allotment  of  the  profits  of  industry 
is  not  yet  anywhere  attained. 

D.  In  the  vastly  varied  fortunes  of  the  rich  and  poor,  the  bet- 
ter order  of  things  encounters  hostile  interests,  and  the  errors  in 
civil  and  social  administration  derange  the  distribution  of  profits 
in  freedom,  even  as  they  do  in  slavery.  Yet  I  suppose  that 
through  all  disturbing  circumstances  there  must  be  a  potential 
movement  in  the  direction  of  individual,  as  well  as  of  general 
welfare. 

T.  The  field  of  research  which  you  open  is  quite  too  broad  for 
our  present  purpose  ;  perhaps,  for  our  powers  of  solution.  Let  us 
confine  ourselves  to  the  question  of  wages,  and  the  principles 
which  seem  to  govern  its  fortunes.  Mr.  Cai»ey  meets  it  with  the 
following  propositions:  — 

"1st.  Labor  gains  increased  productiveness  in  the  proportion 
that  capital  contributes  to  its  efficienc}7."     This  is  self-proved. 

"  21.  Every  improvement  in  the  efficiency  of  labor  so  gained 
by  the  aid  of  capital  is  so  much  increased  facility  of  'accumula- 
tion." This  proposition  also  stands  self-proved.  Thus  increase 
of  stock,  or  fund,  or  wealth,  is  effected,  and  the  means  and 
inducements  of  equitable  distribution  are  provided  and  made 
possible  by  the  terms  of  the  position  taken. 

"3d.  The  increased  power  of  production  and  accumulation 
lessens  proportionately,  in  labor-cost,  the  value  of  similar  pro- 
duets  previously  existing,  and  brings  them  more  easily  within  the 
purchasing  power  of  present  labor." 

D.  Then  labor  must  gain  something  no*  intrinsically  its  own  by 
joint  action  with  capital.  Plow  is  that?  It  is  commonly  believed 
that  labors  borrows  nothing  from  capital,  but  in  fact,  lends  it  all 
its  gains. 

T.  A  spade  is  capital  to  whomsoever  it  belongs.  Labor  gains 
all  the  difference  of  effectiveness  from  it  that  there  is  between  its 
instrumentality  and  the  service  of  naked  hands.     Let  us  under- 


WAGES,    PROFITS,    AND    INTEREST.  99 

stand  this  thing.  Labor  and  capital  arc  not  on  a  see-saw  playing 
upon  a  fixed  pivot  or  fulcrum,  with  a  fixed  range  of  motion 
allotted  and  circumscribed,  so  that  one  can  go  up  no  higher  than 
the  other  goes  down.  They  are  joint  actors,  not  antagonists.  If 
two  persons  find  a  commodity  ready  made,  any  division  of  it  to 
one  of  them  is  a  reduction  of  the  share  of  the  other.  But  the 
laborer  and  the  capitalist  are  jointly  concerned  in  creating  a  new 
value — an  increase  upon  the  subject  and  service — of  which  each 
may  have  a  share  without  robbing  the  other  of  anything  that  he 
independently  owned  before  the  effort  made  for  the  enhancement 
of  the  principal  investment.  If  capital  is  increased  with  the  aid 
of  labor,  and  labor  is  made  more  productive  by  the  aid  of  capital, 
the  enterprise  is  mutual,  and  the  accumulation  is  a  joint-stock,  to 
be  distributed  equitably,  and  there  is  no  give  and  take  in  the 
division.  Capital,  in  the  last  analysis,  is  garnered  labor,  it  has 
been  earned  or  acquired  by  its  possessor  and  is  his  own.  Capital 
has  been  happily  called  "dried  labor."  This  is  not  a  figure  of 
speech  only,  but  a  matter  of  fact,  if  the  logical  maxim  is  true — 
the  cause  is  in  the  effect. 

P.  The  first  and  second  of  Mr.  Carey's  propositions  are  clear 
enough,  but,  for  the  third;  how  does  increased  accumulation 
lessen  the  labor-cost  of  commodities  tf  the  consumer?  Of  course 
the  market  price  or  exchange  value  .will  be  reduced,  but  how  are 
wages  thereby  affected;  for  it  is  the  resulting  distribution  of  ben- 
efit to  the  laborer  that  we  are  now  concerned  with? 

T.  A  history  of  wages  during  the  progress  of  advancing  pro- 
ductiveness would  answer  this  question,  and  answer  it  satisfacto- 
rily ;  but  let  us  first  look  at  the  operative  causes  at  work.  Mr. 
Carey  gives  the  first  step  in  the  solution  by  his  definition  of  value, 
which  in  his  rendering  is  the  cost  of  reproduction;  in  effect,  that 
nothing  can  command  a  higher  price  than  the  cost  of  producing  a 
similar  thing  or  substitute  at  the  time  of  the  purchase;  and, 
accumulation  producing  increased  cheapness  of  price,  is  the  bene- 
fit of  the  consuming  laborer,  as  of  all  other  purchasers.  The 
argument  runs  thus:  The  laborer  must  receive  his  share  or  wages 
out  of  the  product  to  which  he  contributes — no  other  source 
exists.  That  possible  share  depends  upon  the  quantity  of  the 
product.     The  larger  this,  the  greater  the  fund  upon  which  he 


100  POLITICAL   ECONOMY. 

may  draw.  Here  we  have  provision  for  enhancement  of  wages  in 
due  proportion  with  increase  of  productiveness  (which,  it  is  to  be 
noted,  is  in  part  the  fruit  of  the  cooperative  capital  employed). 
This  is  the  possible  of  his  participation  in  the  improvement  of  his 
own  department  of  industry,  and  of  similarly  improved  industries, 
whose  products  he  needs  for  his  use. 

I).  Let  me  interrupt  with  the  suggestion  that  the  capitalist  is 
not  only  the  owner  of  the  product  but  of  the  labor  which  he  hires 
or  purchases  ;  and,  so  far,  has  the  command  of  prices.  How  does 
reduced  market  price  effectively  and  necessarily  operate  to  increase 
the  price  of  labor  ?  The  forces  are  not  only  in  the  ability,  but  in 
the  interest  and  the  will  of  the  capitalist,  that  influence  the  wages 
accorded  to  the  workman.  I  do  not  see  how,  on  business  princi- 
ples, the  employer  is  forced  or  induced  to  divide  profits  so  equita- 
bly, unless  by  strikes  or  public  opinion  invoked  and  enforced  by 
social  sentiment,  and  by  the  indirect  influence  of  political  power 
in  representative  governments— causes  which  do  not  come  within 
the  domain  of  natural  law,  and  are  not  everywhere  and  always 
operative. 

T.  To  say  nothing  of  the  reserve  of  compelling  power  that  there 
is  in  the  laboring  classes  to  be  feared  or  exerted  in  favoring  circum- 
stances, or,  of  the  force  of  the  sentiment  and  sympathies  of  justice 
embodied  in  public  opinion,  and  which  are  not  entirely  inactive  even 
in  the  conscience  of  the  capitalist, — motive  or  motor  impulse  is 
found  in  such  considerations  as  these: — The  human  machine,  like 
the  inanimate,  and  for  the  same  reasons,  yields  results  to  the 
employer  in  the  measure  of  its  capabilities.  Its  highest  condition  is 
necessary  to  its  highest  service-worth.  Over  and  above  the  physi- 
cal energies  of  the  one,  corresponding  to  the  structural  powers  of 
the  other,  the  human  worker  has  his  most  available  force  and  pro- 
ducing worth  in  his  moral  and  rational  faculties,  in  his  skill,  his 
fidelity,  and  his  ambition.  The  cultivation  of  these,  up  to  their 
highest  serviceableness,  requires  the  opportunity  of  some  leisure, 
the  stimulus  of  current  comforts,  and  the  incitement  of  future  hope. 
The  best  use  of  a  man  cannot  be  had  upon  wages  barely  sufficient 
for  the  lowest  necessities  of  animal  life.  Even  the  owner  of  a  slave 
must  purchase  extra  service  by  extra  remuneration.  Rewards  are 
as  much   the  policy  as  they  are  the  equity  of  business.     The  felt 


WAGES,    PROFITS,    AND    INTEREST.  101 

force  of  these  inducements  is  manifest  in  the  wages  and  salaries  of 
every  kind  of  service.  The  ox  has  more  brute  force,  and  the 
steam-engine  has  more  mechanical  power,  yet  these  are  hired  at 
a  cheaper  rate  than  the  labor-market  affords  to  the  high  human 
faculties  on  which  capital  depends  for  its  largest  profits.  The  ass 
knoweth  his  master's  crib,  and  expectation  quickens  his  movements 
toward  it,  but  a  man  has  the  incitement  of  things  and  hopes  beyond 
the  clink  of  the  corn-chest.  Even  when  he  sleeps  his  dreams  are 
of  the  future.  The  employer  knows  all  this  and  estimates  its  value. 
He  knows  that  nothing  is  to  be  had  for  nothing,  and  thus  the  con- 
tributary  effectiveness  of  the  workman  secures  to  him  a  growing 
dividend  in  the  growing  value  of  productiveness,  which,  indeed,  is 
not  all  his  own,  or  the  result  of  his  own  agency,  but  without  which 
the  enhancement  could  not  be  made.  The  difference  between  the 
rates  of  wages  and  salaries,  from  those  of  the  lower  forms  of  labor 
up  to  the  highest,  exemplifies  the  natural  operation  of  these  con- 
siderations. When  you  can  tell  me  why  one  man  gets  but  one 
dollar  a  day  for  his  work,  and  another  gets  five,  you  will  have 
clearly  read  this  riddle. 

P.  So,  "there  is  a  tide  in  the  affairs  of  men  which  taken  at  the 
flow  leads  on  to  fortune."     How  about  the  ebb  ? 

T.  The  law  of  progress  rules  in  advancing  communities.  The 
retrograding  owe  their  misfortunes  to  its  violation,  which  is  a  neg- 
ative proof  of  its  truth.  The  law,  whose  operations  we  have  noticed, 
rules  in  the  policy  of  business.  There  is  another  law  inherent  in 
the  nature  of  things,  tending,  to  th'e  same  issue — it  is  that  in  ad- 
vancing'communities  nothing  can  increase  in  value  but  Land  and 
Labor.  They  are  both  advanced  in  exchange  and  intrinsic  value 
by  the  cost  of  their  production,  by  the  improvement  of  their  quality 
and  productiveness,  with  the  necessary  result  that  the  products  of 
both  alike  when  they  take  the  shape  of  commodities  and  services 
in  exchange,  regularly  decline  in  price. 

P.  That  sounds  like  a  paradox. 

T.  It  is  not  the  less  true  and  inevitable.  Land,  as  the  word  is 
here  used,  stands* for  all  the  materials,  and  Labor  for  all  convert- 
ing agencies.  Land  as  it  lies  in  nature  is  a  forest,  a  jungle,  a 
morass,  a  heath,  or  a  rock.  It  must  be  subdued  to  use,  and  it  is 
valuable  in  the  degree  that  it  is  subdued  and  improved.     This  im- 


102  POLITICAL  ECONOMY. 

prove  ment  is  measured  by  the  labor-cost  expended  and  reflected 
upon  it.  Thus,  labor  is  incorporated  with  land,  and  they  grow 
together  in  worth.  They  are  inseparable  in  estimation  as  in  service. 
Their  products  must  cheapen  in  the  ratio  of  their  increased  abund- 
ance. If  an  acre  that  formerly  produced  only  10  bushels  is  made 
to  yield  40,  and,  if  half  a  dozen  hands  can  make  as  much  cotton 
thread  as  70,000  women  can  spin  in  the  same  time,  the  products 
must  cheapen  in  proportion  to  their  abundance  of  yield  at  the  same 
cost  of  production.  The  substance  of  the  land,  and  the  man  in 
himself,  increase  in  value  by  and  according  to  the  costs  of  their 
improvement;  and  it  is  a  general  law  that  the  most  costly  machinery 
yields  the  cheapest  products.  A  railroad,  with  its  bridges,  engines, 
and  rolling-stock,  costs  millions,  but  its  service  in  transportation  of 
men  and  things,  in  the  aggregate,  costs  hundreds  of  times  less  than 
porterage  by  men  and  horses.  Not  a  dollar  is  invested  in  any 
sort  of  mechanism  but  with  the  view  to  cheapen  its  products.  The 
effect  of  all  improvements  in  the  process  of  manufacture  is  to  more 
and  more  overcome  the  resistance  of  the  raw  material  and  to  di- 
minish the  cost  of  production.  The  advanced  value  of  instruments 
and  agents  is  encountered  for  the  very  purpose  of  diminishing  the 
cost  of  their  service.  The  diminishing  value  of  products  applies 
to  uses,  not  to  the  instruments,  whether  human  or  mechanical. 
The  effect  of  Progress  is  the  enhancement  of  Power  and  increase 
of  uses  by  subduing  nature's  resistance. 

I).  The  effect  of  labor-cost  in  creating  worth  or  exchange 
value  cannot  be  universal. 

T.  You  are  thinking  of  the  instances  of  genius  and  natural 
endowments,  as  they  diminish  the  cost  of  acquirement  by  lessening 
the  time  and  effort  required  to  develop  their  availableness.  But, 
if  everything  must  have  a  cause,  such  specialties  of  capability  have 
been  preparing  through  past  generations,  and  have  cropped  out  in 
the  present,  just  as  the  richer  soils  have  been  produced  from  the 
barren  rock  by  the  working  of  sunshine,  air,  and  water  through 
the  ages.  Nature  works  for  us  in  the  progressive  improvements 
of  her  times  and  seasons,  just  as  she  does  in  'the  forces  of  the 
mechanical  powers,  her  labor-cost  in  production,  issuing  in  ready- 
made  values  to  us.  One  thing  is  clear — the  cost  of  reproduction 
determines  the   price  of  the  extraordinary  as  well   as  of  the   com- 


WAGES,   PROFITS,    AND    INTEREST.  103 

njonest  powers  of  men  and  things.  At  what  price  could  Bamurn 
reproduce  a  Jenny  Lind  ?  At  the  expense  of  educating  a  thousand 
students,  and  possibly  with  a  failure  in  every  trial.  The  fancy 
case  of  finding  a  diamond  on  the  seashore  at  no  greater  expense 
than  the  trouble  of  picking  it  up,  is  an  instance  of  trifling  with 
conundrums,  instead  of  exploring  the  natural  course  of  laAv  in  con- 
stant operation  ;  but  even  this  favorite  play  at  puzzles  is  not  un- 
manageable by  the  fair  application  of  the  rule.  That  stray  dia- 
mond is,  perhaps,  not  overvalued  by  the  cost  of  reproduction,  if  the 
loo-ic-mon"-ers  were  put  to  work  to  find  another  in  the  same  way. 
Moreover,  it  will  not  command  a  higher  price  than  the  cost  of 
washing  for  the  like  thing  in  the  mines  of  Brazil.  If  there  be  any 
doubt  that  labor  is  the  cause  of  all  values,  there  can  be  none  that 
it  is  their  measure. 

P.  That  the  effective  remuneration  of  labor  must  follow  the 
accumulation  of  the  general  wealth  is  obvious  from  the  immense 
expansion  of  the  market  for  commodities.  It  is  understood,  upon 
safe  statistical  evidence,  that,  seventy  years  ago,  the  people  of 
England  consumed  but  one  yard  of  cotton  cloth  per  head,  and  that 
now  they  buy  and  use  85  yards  to  each  individual.  In  all  such 
cases  as  this  wages  have  either  been  levelling  up  or  prices  have 
been  levelling  down,  and  the  result  is  an  increase  of  the  purchasing 
power  of  the  earnings  of  the  industrial  classes. 

T.  The  general  progress  and  improvement  in  the  condition  of 
things  which  we  call  civilization  is  evidence  enough.  Eight  or  ten 
centuries  since  the  society  of  Europe  consisted  of  a  few  masters 
and  a  multitude  of  serfs.  The  law  that  has  worked  through  all 
the  changes  now  realized  still  works  for  the  elevation  of  the  masses. 

P.  The  "  authorities,"  not  finding  any  law  of  distribution  gov- 
erning in  the  relations  of  capital  and  labor,  abandon  it  to  chance, 
to  competition,  to  "  supply  and  demand."  This  irregular  regu- 
lator has,  in  fact,  great  force  in  the  practical  settlement  of  the 
question  ;  yet  there  may  be  some  law  running  through  all  the 
attendant  disturbances, — some  constant  endeavor  toward  a  pro- 
vided end  and  issue  in  harmony. 

D.  The  process  hitherto  has  been  so  slow  that  it  may  be  sus- 
pected of  lying  almost  dormant  at  times  which  most  required  its 
activity.     The  pauperism  of  the  one-twentieth  of  the  inhabitants 


((I71TI7EESITT 


104  POLITICAL    ECONOMY. 

of  Great  Britain,  as  lately  as  in  the  year  1870;  the  compulsory 
emigration  of  some  millions  of  the  people,  and  the  desperate  con- 
dition of  many  other  millions,  stand  as  striking  exceptions  to  the 
operation  of  your  occult  law  of  progressive  betterment. 

T.  Slow,  but  sure,  and  vastly  effective.  Much  of  the  old-time 
bondage  remains,  but  much  has  been  removed.  The  kingdoms  of 
Europe  are  already  in  effect  republics,  governed  by,  as  they  rest 
upon,  numbers,  of  which  the  industrials  are  the  majorities,  and 
these  are  learning  to  exert  their  power. 

D.  You  admit  that  the  wages-system  is  only  an  ameliorated 
bondage,  and  that  the  benefits  of  freedom  are  contingent  upon 
circumstances  not  under  control. 

T.  It  has  been  wisely  said  that  adjectives  are  the  most  dan- 
gerous enemies  of  substantives;  and,  let  ms  add,  that  epithets 
are  not  safe  descriptions.  We  don't  speak  of  the  disabilities  of 
infancy  and  pupilage  as  modes  of  ameliorated  bondage.  That 
which  is  progressive  cannot  be  described  as  fettered.  The  child 
is  growing  even  while  he  creeps  ;  he  toddles  insecurelv,  and  often 
tumbles  after  he  has  got  upon  his  feet;  the  youth  is  handicapped 
with  his  lingering  childhood,  but  the  laws  of  life  are  working  in 
him,  promising  the  full  powers  of  maturity  in  due  time, — that  is, 
as  soon  as  he  is  able  to  exercise  them  well. 

P.  The  broad  scope  of  history  certainly  proves  a  prevailing 
law  of  progressive  improvement  in  the  laboring  classes  of  civili- 
zation. 

T.  In  periods  of  years  long  enough  to  exhibit  the  current  of 
this  interest,  however  disturbed  by  its  irregular  ripples  and  inci- 
dental obstructions,  its  headway  is  marked  by  such  measures  as 
these  :  — 

The  wages  of  bricklayers,  masons,  and  carpenters  at  Greenwich, 
England,  in  100  years  (from  L735  to  1835),  doubled  in  money 
price  (from  2,8.  Qd.  to  5s.  per  diem). 

According  to  William  Penn's  cash-book,  to  earn  one  ton  of  flour 
required  the  unskilled  labor  of  137  days;  in  1834  (135  years 
after),  the  like  labor  earned  the  price  of  one  ton  of  flour  in  78 
days. 

In  France,  in  the  year,  1700,  the  annual  wages  of  a  family  of 
■1A  persons  is  given  by  competent  statisticians  at  the  then  price  of 


WAGES,    PROFITS,    AND    INTEREST.  105 

21  bushels  of  wheat — in  1840  at  GO  bushels.  In  that  period 
of  140  years,  agricultural  products  of  every  kind  quadrupled. 
The  population  was  not  nearly  doubled,  so  that  the  distributive 
share  in  wages  was  very  probably  more  than  doubled. 

The  weekly  wages  of  women  in  domestic  service,  in  the  United 
States,  averaged  62  J  cents  in  the  year  1814;  in  1860  they  rose 
to  $1.75,  and  now,  in  1880,  they  range  from  $2.00  to  $3.00  in 
money. 

D.  The  purchasing  power  of  money  varies  at  long  intervals  ; 
and  this  point  is  involved  in  the  relative  worth  of  nominal  wages. 

T.  Let  us  try  it  upon  the  relative  value  of  the  wages  of  house- 
servants  in  the  period  taken — 46  years  from  1814  to  1860 — dates 
which  mark  the  rise  from  the  lowest  average  to  the  time  before 
our  civil  war,  and  the  suspension  of  specie  payments.  I  give  it  in 
tabular  form  for  the  better  presentment  to  the  eye,  compared  with 
the  prevailing  prices  of  the  several  commodities  which  the  hireling 
needed  to  purchase  with  her  earnings. 

Weekly  money  wages  in  1814  $0  62£  Weekly  money  wages  in  1860  $1  75 

1  yard  of  dimity        .         .        62^  7  yds.  dimity  at  25  cts.        .     1  75 

2  yds.  sheeting  at  31|  cts.  62£  14  yds.  sheeting  at  12£  cts.  1  75 
2h  yds.  calico  at  25  cts.  .  62^  14  yds.  calico  at  12£  cts.  .  1  75 
2£  yds.  shirting  at  25  cts.          62^  17£  yds.  shirting  at  10  cts.         1  75 

Other  articles  of  dress  had  fallen  greatly  in  price,  if  not 
equally  in  the  time.  With  the  cost  of  food  and  lodging  she  was 
not  concerned,  except  as  to  quality  and  comfort,  which  with  many 
other  conveniences,  had  in  the  mean  time  greatly  improved.  For 
general  results  look  at  the  promenades  in  our  streets,  and  the 
attendance  at  the  churches.  The  difference  between  the  appear- 
ance of  mistress  and  maid,  so  strongly  marked  60  years  ago,  has 
entirely  disappeared.  Moreover,  the  domestic  servant  has  since 
learned  to  read,  and  does  read  the  daily  newspaper,  as  well  as  the 
lady  who  employs  her,  and  is  even  a  customer  of  the  circulating 
library.  How  much  of  their  earnings  these  women  are  able  to 
contribute  to  the  support  of  their  churches  and  charities  would  be 
hard  to  guess,  but  it  is  safe  to  say  that  the  aggregate  is  equal  to 
the  like  contributions  of  the  entire  parish  in  which  they  live  at 


106  POLITICAL  ECONOMY. 

the  beginning  of  the  era  of  the  rise  in  their  money  wages.  The  bills 
of  exchange  upon  Europe,  bought  with  the  surplus  of  their  earn- 
ings, amount  to  hundreds  of  thousands  of  dollars  per  annum  in  our 
largest  cities.  Ask  their  brokers  for  information  as  to  this  item, 
sent  to  their  friends  in  the  "Old  Country,"  and  in  the  "Father- 
land." 

D.  You  set  the  "  Song  of  the  Shirt"  to  a  different  tune;  yet 
it  remains  a  doleful  accompaniment  to  the  needle-woman's  work  in 
the  common  branches  of  their  avocation. 

T.  Labor-saving  machinery  must  answer  for  the  difference  in 
the  fortunes  of  skilled  and  unskilled  labor  employed  upon  the 
same  materials.  The  drift  of  events  in  all  forms  of  production 
and  service  is  evidently  and  necessarily  the  displacement  of  drudg- 
ery by  art,  the  unintelligent  toiler  by  the  artisan,  as  the  steam- 
car  has  displaced  the  pack-horse  in  the  transportation  of  freight. 
Old-time  uses  must  give  way,  if  the  progress  of  society  is  allowed, 
and  whatever  of  them  remains  to  continue  the  unequal  conflict- 
with  the  new,  must  take  the  consequences.  There  is  no  help  for 
it.  The  new  generation  must  live  under  the  new  order.  The 
army  that  equips  itself  with  the  flint-lock  musket  of  a  century  ago 
must  go  down  in  squadrons  before  the  troops  armed  with  the 
breech-loaders  of  the  present  pattern. 

D.  You  have  selected  certain  departments  of  industry,  which 
by  the  record,  have  greatly  bettered  the  condition  of  the  employ- 
ees. In  some  cases  measuring  the  real  value  of  money  wages  by 
the  current  prices  of  wheat,  in  others  by  the  market  prices  of  tex- 
tile fabrics.  Have  you  no  data  for  a  comprehensive  presentment 
of  the  comparative,  total  of  income  and  expense? 

T.  I  do  not  claim  a  verdict  upon  the  items  of  evidence  adduced. 
Wheat  is  one  of  the  most  uncertain  standards  that  can  be  chosen 
for  the  demonstration  of  the  debtor  and  credit  sides  of  labor.  It 
has  ranged  in  England  all  the  way  from  $1.33  to  Si!.:20  per 
bushel,  being  often  highest  when  wages  were  lowest,  and  always 
capricious  in  its  fluctuations.  It  was  down  to  Si. 14  in  December, 
Isiil,  and  up  to  S2.21  in  April,  1868.  Besides,  its  advances  and 
declines  of  price  do  not  follow  in  calculable  succession,  as  textile 
and  metallic  fabrics  usually  do;  and  the  fluctuations  of  the  other 
cereals  arc  nearly  as  great.      Such  statistics  as  are  at  command 


WAGES,   PROFITS,    AND    INTEREST.  107 

must  be  used  when  the  argument  demands  them.  At  best,  they 
are  more  or  less  approximations  to  the  facts  required.  For  this 
reason  I  rely  on  the  general  indications  of  economic  conditions  for 
the  basis  facts  of  the  case. 

P.  I  have  occasionally  seen  statements  of  the  wages  of  men 
and  women  in  certain  occupations  with  specified  items  of  the  ex- 
pense of  living.  Do  not  such  imports  throw  some  light  upon  our 
subject  ? 

T.  The  Bureau  of  Statistics  of  Massachusetts  aifords  such  a  re- 
port for  the  year  1874,  in  which  the  earnings  and  expenses  of  6l 
families  are  stated  thus  : 

Average  cost  of  living  for  each  family     .     .     .     $885  62  for  the  year. 
Average  earnings  of  the  fathers    .     .     .$619  18 
"      children   .     .       310  78 

929  96 

Number  of  persons  in  family,  6  ;  number  of  rooms  occupied,  5  ; 
number  of  children  at  school,  2  : — Average. 

P.  These  families  appear  to  have  but  $14.32  over  their  ex- 
penses at  the  end  of  the  year.  Not  much  margin  for  accidents  or 
ultimate  accumulation  in  that  amount. 

T.  To  estimate  the  avails  of  their  labor  look  at  the  items  of 
expense  allowed. 

Average  cost  for  each  family:  Rent,  $146.58;  groceries, 
$350.38  ;  meat  and  fish,  $108.28  ;  clothing,  boots,  and  shoes, 
$114.05  ;  religion,  books,  papers,  and  societies,  $23.18  ;  fuel, 
$51.19  (ranging  from  $40  to  $70)  ;  sundries,  $33.70.  Other  con- 
ditions— nearly  all  the  rooms  carpeted  ;  40  houses  have  parlors  ; 
40  families  have  sewing-machines  ;  13  have  pianos;  '3  have  parlor 
organs  ;  10  have  money  in  savings  banks  ;  2  have  insurance  on 
their  lives ;  1  has  a  fine  library  ;  all  well-dressed,  except  1 ;  1 
passably  well ;  1  moderately  well ;  1  poorly. 

Of  124  skilled  workmen,  the  fathers  of  families  only,  at  wages. 
The  average  of  the  father's  wages,  $746.15.  These  families 
average  4  persons  each  ;  2  children  at  school;  the  number  of  rooms 
occupied,  5. 

A  Massachusetts  employments'  report  for  1873  gives  the  number 
of  males  in  the  factories,  over  16  years  of  age,  177,500  (64  per 


108 


POLITICAL  ECONOMY. 


cent,  of  the  total)  ;  females  over  15,  85,939  (31  per  cent,  of 
total)  ;  children,  14,075  (5  4-  per  cent,  of  total) ;  total  employed, 
277,654.  The  average  number  of  working  days  in  the  year,  280; 
which  leave  52  Sundays  and  33  week-days  exempt. 

P.  These  figures  do  not  serve  to  show  changes  of  rates  at  in- 
tervals long  enough  to  indicate  the  progress  which  you  believe  to 
have  occurred  in  the  last  40  or  50  years.  Our  census  reports 
given  every  10th  year  cover  the  capital,  the  cost  of  materials,  the 
value  of  products,  and  the  total  wages  paid  in  all  the  manufacturing, 
mining,  and  mechanic  arts  pursued  in  the  United  States.  Why 
not  try  the  changes  between  1840, 1850, 1860,  and  1870  ?  These 
promise  authentic  data  for  the  inquiry. 

T.  I  have  exhausted  myself  with  many  a  day's  labor  upon  these 
census  reports,  and  have  found  them  utterly  useless,  and  even 
delusive,  in  the  matter  of  the  wages  of  laborers  in  the  several,  and 
in  the  whole  of  the  avocations  which  they  embrace  and  profess  to 
exhibit. 

P.  I  had  hopes  of  certain  and  useful  information  from  the 
official  record. 

T.  So  had  I  when  I  was  younger  in  statistical  studies. 

These  are  the  factors,  or  all  the  available  data  which  these 
reports  afford  for  "a  history  of  wages  for  the  three  last  decades, 
1850,  1860,  and  1870: 


Year. 

Hands  employed 

Total  wages. 

Value  of  products. 

Wages  to  products. 

1850 
I860 

1870 

957,059 
1,311,266 

2,053,996 

$236,754,834 
378,878,966 
775,584,343 

$1.019,106.r,lG 
1,885.861,676 
4,232,325,442 

23.23  per  cent. 
20.10    "      " 
18.32    '•       - 

This  statement  gives  the  ratio  of  the  total  wages  to  the  total 
product,  but  nothing  of  the  relative  amounts  to  either  class  of 
employees,  men,  women,  and  children — and  nothing  more  specific 
for  our  use  in  anything  else  which  the  reports  afford.  The  number 
of  females  is  given  for  1850  and  1860  ;  and  for  1870  the  number 
of  women  and  children,  together,  but  nothing  exact  as  to  the  dif- 
ferent rates  paid  to  the  unlike  classes,  nor  of  the  time  employed 
by  either  of  them,  nor  of  the  varied  rates  in  the  unlike  employ- 
ment of  the  individuals  in  the  same  classes. 


WAGES,    PROFITS,    AND    INTEREST.  109 

Observing  the  decreasing  percentage  of  the  wages  to  the  value 
of  the  products  between  1850  and  1870,  but  finding  the  inference 
contradicted  by  all  the  other  information  attainable,  I  was  at  first 
inclined  to  attribute  it  to  a  transfer  of  producing  power  from 
hand-labor  to  the  increase  of  machinery  ;  but  there  is  nothing  in 
the  facts  and  figures  given  to  support  such  an  explanation. 

There  the  wages  of  men,  women,  and  children  are  lumped  in 
statement,  and  the  specific  value  of  each  is  not  given.  What  is 
gained  by  dividing  a  total  value  of  products  by  the  total  number 
of  mixed  classes  drawing  very  different  rates  from  it  ?  An 
expert  put  the  compensation  in  1850  at  five-ninths  for  women  to 
nine-ninths  for  men  ;  but  this  result  was  guess-work  then,  and  far 
from  a  guide  at  any  subsequent  date. 

D.  Is  the  Census  Bureau  aware  of  these  difficulties  and  un- 
certainties, and  the  resulting  impossibility  of  comparing  the  changes 
in  the  rate  of  wages  at  successive  decades,  notwithstanding  the 
elaborate  details  which  occupy  the  reports  ? 

T.  The  superintendent  states  all  these  sources  of  illusion  in  his 
tabular  statements,  and  many  more  equally  fatal  to  the  supposed 
worth  and  reliability  of  the  returns  made  by  the  assessors  to  the 
central  office.  In  particular,  as  relates  to  the  relation  of  wages 
to  products,  you  will  find  in  the  3d  volume  of  the  9th  census — that 
for  1870,  he  is  careful  to  exhibit  the  varied  ratio  of  wages  to 
products  in  five  classes  of  manufactures,  showing  that  in  his  1st 
class  the  wages  are  equal  to  51  per  cent,  of  the  value  of  the  pro- 
ducts ;  in  the  2d  class,  a  little  less  than  25  per  cent. ;  in  the  3d 
class-,  31  -f  per  cent.  ;  in  the  4th  class,  20  per  cent. ;  and  in  the 
5th,  only  3|  per  cent.  In  the  averaged  total  of  the  five  classes, 
19t4q-  per  cent. 

Now,  mass  these  items,  not  forgetting  the  difference  in  the  num- 
ber of  hands  of  the  several  classes  ;  the  differing  rates  of  the  dif- 
ferent classes  ;  the  different  earnings  among  the  men,  women,  and 
children  in  each  group,  which  is  not  reported,  and  you  will  be  able 
to  pronounce  an  opinion  upon  the  possible  result  to  our  special 
inquiry  from  such  sources  of  information. 

The  superintendent  goes  further.  He  treats  the  report  of  the 
capital  employed  as  falling  short  of  the  truth,  probably  to  the 
amount  of  three-fourths  of  the  actual  amount  invested.     He  pro- 


110  POLITICAL   ECONOMY. 

nounces  the  value  of  the  materials  unreliable,  and  even  of  the 
products  he  shows  that  the  totals  given  exaggerate  the  increase  of 
1870  over  18G0  at  no  less  than  $307,366,792, — nearly  8  per  cent. 

The  wages  column  is  rendered  worthless  and  delusive  by  the 
circumstance  that  in  many  occupations  the  employers  nearly  equal 
the  hired  hands  in  number, — such  as  blacksmiths,  shoemakers, 
tailors,  millers,  watchmakers,  and  the  like.  The  labor  of  these 
people  is  not  valued  in  the  wages  column.  The  superintendent 
remarks  that,  in  1870,  there  were  about  20,000  of  these  artisans 
whose  products  are  valued,  but  their  work  is  treated  as  profits, 
and  is  not  given  as  wages. 

In  agricultural  labor  the  matter  is  still  worse  than  in  the  me- 
chanical, from  obvious  causes,  which  I  need  not  detail.  Wages 
paid  and  reported  in  this  industry,  whose  products  are  registered 
as  equal  to  all  other  occupations,  are,  perhaps,  not  equal  to  a  hun- 
dredth part  of  the  labor  performed.  Yet  both  are  given  in  the 
census  tables,  and  have  their  distorting  effect  upon  the  ratios 
derived  from  the  totals  so  made  up. 

More  than  all  these  troubles,  and  at  the  bottom  of  all  the  incon- 
gruities, is  the  fact  that  many  hundreds  of  assessors  are  employed 
in  furnishing  the  returns  for  the  equally  numerous  districts  in  the 
nation.  They  estimate  quantities  and  values  without  a  uniform 
standard,  and  with  unequal  capabilities  and  grades  of  fidelity. 
Beside  all  this,  they  have  impossibilities  to  perform.  The  central 
office  understands  these  sources  of  error  perfectly  well,  and  does 
the  best  it  can  to  put  its  chaos  of  materials  into  order,  but  with 
uncertain  success. 

In  full  view  of  the  case,  the  anxious  inquirer  must  run  the 
hazard  of  drawing  inferences  from  the  figures  submitted  for  his 
guidance. 

P.  If  such  inaccuracy  is  inseparable  from  our  census  system  in 
matters  of  wealth,  I  do  not  wonder  that  England  confines  hers  to 
the  enumeration  of  persons  with  their  conditions  of  sex,  age,  physi- 
cal and  social  circumstances.  But  how  do  their  statisticians  esti- 
mate the  nation's  wealth  and  its  productive  industries  ? 

T.  It  is  worth  while  in  this  connection  to  note  their  methods,  if 
for  no  other  purpose  than  for  its  implied  criticism  of  our  own. 

Totally  rejecting  the  process  of  actual  assessment,  and,  as  I 


WAGES,    PROFITS,    AND    INTEREST.  Ill 

think,  for  sufficient  reasons,  they  resort  to  such  sources  of  infor- 
mation as  these  : — The  tax  registers  ;  excise  taxes  upon  domestic 
products  and  sales  ;  taxed  incomes  ;  investments  in  stocks  ;  pro- 
bates of  decedents'  estates ;  fire,  marine,  and  life  insurances ; 
rental  of  real  estate  ;  bank  reports,  and  other  indicia?  of  business 
affairs.  The  distances  which  lie  between  such  data  as  these,  and 
the  results  sought  for  are,  indeed,  both  dubious  and  considerable  ; 
but  the  process  is  the  best  that  can  be  employed.  Observe  that 
they  never  concern  themselves  with  principal  values  of  any  species 
of  property,  but  with  the  current  proceeds;  rightly  judging  that 
wealth  is  in  what  property  yields  in  the  various  industries,  not  in 
what  it  is  valued  at  in  speculation.  This  is  what  they  mean  by 
saying  lands  and  stocks  are  worth  so  many  years'  purchase,  from 
which,  if  you  like,  you  may  infer  the  capital  value. 

P.  Do  the  authorities  concur  nearly  enough  to  support  their 
several  calculations  by  the  method  which  you  think  the  better  one  ? 
T.  No  ;  they  differ  widely,  taking,  as  they  do,  different  bases 
of  estimate.  Gladstone  takes  the  income  tax  for  a  measure  of  the 
growth  of  the  wealth  of  the  kingdom  of  Great  Britain  (Ireland 
being  excluded),  and  thence  infers  that  it  is  now  being  doubled  in 
about  19  years.  J.  R.  McCulloch  recently  adopted  the  exports 
with  a  very  different  result,  and  as  widely  different  from  his 
earlier  estimate. 

Colquhoun,  the  best  and  safest  of  these  calculators,  rendered  the 
rate  of  growth  in  1812  as  doubling  in  20  years.  Pablo  Pebrer, 
taking  Colquhoun's  estimate  for  his  basis,  concluded  that  in  1833 
it  was  doubling  in  21  years.  Lowe  and  Porter,  in  1841,  put  it 
at  18  years.  Regarding  the  very  different  rate  of  increase  be- 
tween the  dates  for  which  Gladstone  and  Colquhoun  made  their 
calculations,  they  differ  very  widely,  though  their  figures  seem  to 
corroborate  each  other. 

The  worst  of  all  the  estimates  ever  made  was  by  J.  R.  McCul- 
loch. About  30  years  ago  he  committed  himself  to  the  opinion 
that  "  sixty  years  is  the  shortest  time  in  which  capital,  in  an  old 
and  densely  peopled  country,  can  be  expected  to  be  doubled." 
He  was,  during  35  years,  the  statistician  of  England  ;  but  the  bias 
of  his  doctrine,  that  population  outruns  provision  for  the  race,  per- 


112  POLITICAL  ECONOMY. 

verted  his  arithmetic,  and  made  his  deductions  from  his  figures  as 
fanciful  as  if  he  had  not  been  able  to  count  his  fingers. 

The  basis  of  Gladstone's  estimate — the  income  tax — is  always, 
and  in  all  countries,  infamous  for  its  falsehood.  Lord  John 
Russell  describes  it  as  a  tax  in  which  "inequality,  vexation,  and 
fraud  are  inherent." 

McCulloch's  :  The  value  or  rather  the  official  valuation  of  home 
products  exported  to  foreign  countries  is  quite  as  bad  as  Glad- 
stone's. The  fluctuations  of  prices  that  truly  occur,  the  under- 
valuation of  goods  subject  to  ad  valorem  duties  in  the  ports  to 
which  they  •  are  consigned,  the  indifference  of  custom-house 
officers  to  prices  of  merchandise  on  which  no  export  duty  is 
charged,  with  the  tricks  incident  to  foreign  trade,  make  export 
values  an  exceedingly  unsafe  ground  for  calculation.  Besides 
they  take  no  account  of,  and  bear  no  constant  proportion  to  the 
home  consumption  of  domestic  products. 

P.  Have  you  no  guess  at  the  growth  of  wealth  made  upon  the 
study  of  the  estimates  with  which  you  are  familiar  ? 

T.  I  have  made  my  calculations,  and  from  them  I  guess  that 
Great  Britain  is  now,  I  mean  since  1850,  increasing  her  wealth 
at  the  rate  of  doubling  it  in  20  years,  or  3J  per  cent  compounded 
per  annum  ;  and  that  the  United  States  double  their  aggregate 
wealth  in  9  or  10  years,  or  8  per  cent,  per  annum.  The  increase 
has  been  twice  as  rapid  in  both  countries  in  the  decade  ending  in 
1860,  as  in  the  previous  one  ending  in  1850.  The  more  careful 
treatment  of  this  subject  must  be  deferred  till  we  come  to  con- 
sider money  and  prices. 

D.  The  conclusion  of  the  whole  matter  then  is,  that  we  have  no 
reliable  data  for  a  correct  judgment  of  the  progress  of  wages,  re- 
ported officially  or  given  by  experts.  What  other  evidence  have 
we  that  is  satisfactory  or  worthy  of  dependence  ? 

T.  I  cannot  measure  welfare  in  money  values.  I  cannot  re- 
duce the  rewards  of  labor  to  dollars  and  cents,  and,  of  course,  I 
cannot  show  the  figures  of  arithmetic  for  the  advancement  of  its 
benefits.  But  the  current  of  civil  history  at  every  epochal  wave 
in  its  onward  flow  proves  it  beyond  cavil.  The  people,  as  distin- 
guished from  the  old-time  riding  class, — in  all  countries  that  have 
been  under  the  influence  of  the  advancing  centuries  and  genera- 


WAGES,    PROFITS,    AND    INTEREST.  113 

tions,  have  risen  from  bondage  and  its  poverty  to  that'  power  in 
social  rank  and  civil  government  that  deserves  to  be  called  free- 
dom. Their  supplies  for  their  daily  wants  and  their  opportunities 
as  social  beings  have  increased  immeasurably. 

The  distribution  of  accumulating  wealth  has  tended  to  still  bet- 
ter and  better  provision  for  the  masses.  All  its  forms  and  fruits 
have  been  constantly  descending  to  the  lower  social  levels.  Edu- 
cation, the  useful  and  the  fine  arts,  the  luxuries  of  sense  and  sen- 
timent, step  by  step  with  their  general  advancement,  have  been 
dispersed  and  divided  among  the  many,  in  even  larger  measure 
than  to  the  few.  If  we  subtract  the  idle,  the  criminal,  and  the 
naturally  incapable  from  the  supported  and  dangerous  classes,  the 
merest  fraction  of  the  population  will  remain  to  impeach  the  gen- 
eral prosperity.  An  immense  proportion  of  our  citizens  have  ac- 
quired fortunes  by  their  labor  and  current  opportunities  of  profit. 

The  improvement  made  in  labor-saving  machinery  in  the  past, 
and  most  remarkably  in  the  present  time,  has  the  effect  of  cheap- 
ening commodities  for  general  use,  and  by  remitting  the  industries 
from  muscular  drudgery  to  the  useful  arts,  presses  up  the  lower 
strata  of  society  faster  and  better  than  all  the  moral  and  intellec- 
tual aids,  usually  relied  upon,  could  effect  without  these  economi- 
cal helps. 

All  these  things  are  the  outcome  and  the  expression  of  the 
increase  of  wages.  The  people  have  worked  out  their  redemption 
and  enfranchisement.  I  do  not  attempt  to  express  these  achieve- 
ments in  numbers,  or  their  enhancement  in  percentages,  for  I  do 
not  know  the  money  value  of  the  qualities  of  manhood,  though  I 
am  sure  that  they  have  their  uses  there  also.  I  can  recognize 
and  feel  the  difference  between  a  slave  and  a  sovereign,  but  the 
figures  of  arithmetic  do  not  serve  to  express  it. 

P.  I  wish  you  would  give  us  the  general  issue  of  the  facts  and 
arguments  you  have  employed,  as  they  apply  to  the  history  of 
wages  in  our  own  country. 

T.  I  believe  that  wages  of  men  doubled  in  money  value  in  the 
46  years  between  1811  and  1860.  I  take  1811  as  the  date  at 
which  steam-power  and  modern  machinery  were  introduced  in 
manufacturing  processes  in  the  United  States ;  and  I  fix  upon 
1860  as  the  time  when  nominal  prices  had  not  been  disturbed  by 


114  POLITICAL   ECONOMY. 

our  Southern  rebellion,  producing  the  suspension  of  specie  pay- 
ments. A  period  long  enough  to  embrace  the  ordinary,  or  I  may 
say,  the  natural  changes  of  time  and  circumstances  ought  to  be 
taken  into  the  inquiry  into  the  governing  laws  of  the  subject. 
Fluctuations  through  long  periods,  usually  settle  themselves  into 
an  equilibrium  that  represents  their  undisturbed  tendencies ;  and 
my  general  conclusion  may  be  thus  expressed.  With  the  growth 
of  wealth  and  population,  the  power  of  combination  increases 
with  a  corresponding  increase  in  the  power  of  accumulation ; 
every  step  in  this  direction  being  attended  by  decline  in  the 
power  of  the  already  existing  capital  to  command  the  services  of 
the  laborer,  and  by  an  increase  of  the  power  of  the  latter  to  com- 
mand the  aid  of  capital,  and — 

The  proportion  of  the  increased  product  assigned  to  the  laborer 
tends  steadily  to  increase,  while  that  of  the  capitalist  tends  as 
regularly  to  decline.  The  quantity  assigned  to  both  increases — 
that  of  the  laborer,  however,  growing  far  more  rapidly  than  that 
retained  by  the  capitalist. 

The  tendency  to  equality  is,  therefore,  in  the  direct  ratio  of  the 
growth  of  wealth,  depending,  as  it  does,  upon  the  productiveness 
of  labor. 

I  infer,  also,  from  a  review  of  all  the  facts  and  tendencies  of 
the  forces  at  work,  that  wages  are  the  index  of  productiveness, 
growing  and  declining  together  in  all  changes  that  occur  to  them. 
These  conclusions  I  must  leave  with  you  for  such  investigation  as 
you  may  be  able  to  give  them. 

I).  The  admitted  inaccuracies  of  the  census  reports  concerning 
the  capital  invested,  the  cost  of  materials,  of  labor,  and  the  value 
of  the  products  of  our  manufacturing  industries,  and  the  like  errors 
in  the  department  of  agriculture,  seem  together  to  be  so  great  that 
I  wonder  why  Congress  has  persisted  for  about  40  years  in  requir- 
ing the  assessments. 

T.  These  reports,  notwithstanding  their  unfitness  for  the  uses 
which  I  have  designated,  have  a  certain  value  and  an  important 
one.  However  inaccurate,  they  serve  to  indicate  the  rate  of  pro- 
gress made  from  time  to  time.  The  errors  balance  each  other,  and 
the  sums  are  approximations  to  the  truth.  I  have  adduced  their 
respective  deficiencies  to  warn  you  against  the  averages  and  the 


MONEY.  115 

percentages  winch  they  are  made  to  afford  ;  and,  by  the  way,  let 
me  say  that  the  summarizings  and  clusterings  of  averages  and  per- 
centages are  a  common  vice  of  the  statistical  renderings  of  particu- 
lars, and  the  conclusions  drawn  from  them  are  almost  always 
erroneous,  and  often  fraudulent.  You  must  use  them,  but,  beware 
of  them.  One  added  to  2  is  an  increase  of  50  per  cent. ;  50  added 
to  100  is  the  same  per  cent.,  but  a  very  different  quantity.  So 
the  average  of  1,  2,  8,  4,  and  20  is  6.  Here  the  most  irregular 
of  the  numbers  has  the  greatest  effect  upon  the  average,  and 
really  gives  the  most  erroneous  idea  of  the  series. 


CHAPTER  XI. 
MONEY. 

T.  What  is  money  ? 

P.  Please  don't  ask  me.  It  seems  to  be  a  muddle  and  a  mys- 
tery. The  prevalent  discussions  of  the  subject  are  another  con- 
fusion of  tongues.  The  common  apprehension  is,  perhaps,  only  a 
definition  of  words,  but  not  a  logical  description  of  the  thing.  It 
is  vaguely  called  a  medium  of  exchange — an  equivalent  and  repre- 
sentative of  the  value  of  other  things — a  standard  and  an  expression 
of  value.  The  precious  metals,  which  are  "the  money  of  the 
world,"  are  held  by  some  to  be  the  only  real  money,  and  the  true 
measure  of  all  their  substitutes  and  representatives  ;  calling  the 
former  coin,  or  metallic,  and  the  other,  credit  money.  Money 
taken  in  some  of  its  forms  has  an  intrinsic  value,  but  in  all  its 
forms  and  uses  it  seems  to  serve  as  a  counter  or  computer  without 
any  regard  to  its  substance.  Permit  me  to  put  your  question  to 
yourself — what  is  it  ? 

T.  Metallic  money  is  no  more  the  standard  of  values,  no  more 
their  representative,  no  more  real  money,  than  many  another 
commodity,  nor  than  any  of  its  substitutes  in  use.  Coins  are  not 
even  "the  money  of  the  world"  in  the  sense  of  having  a  fixed  and 
uniform  exchange  value  everywhere  ;  the  metals  in  them  have  a 


116  POLITICAL  ECONOMY. 

market  price  where  they  are  used,  and  that  price  is  as  changeful 
as  that  of  any  other  commodities. 

As  for  the  substances  which  rightfully  take  the  name  and  serve 
the  uses  of  money,  some  of  them  are  and  have  been  such  as  these  :  — 

Moses  expressly  calls  slaves  money.  The  Anglo-Saxons  called 
slaves  and  cattle  living  money,  to  distinguish  these  mediums  of 
purchase  and  payment  from  the  metals  in  use,  which  they  called 
dead  money.  The  American  aborigines  employed  as  a  medium 
of  exchange  variously  colored  shells,  which  they  called  wampum. 
The  native  Africans,  and  some  of  the  people  of  the  Asiatic  islands, 
still  use  shells,  which  they  call  cowries.  Cod-fish  was,  not  long 
airo,  the  current  money  of  New  England:  and  tobacco  was  that 
of  Virginia.  The  ancient  Romans  expressed  and  exchanged  values 
in  cattle  (from  which  we  have  our  word  pecuniary)  ;  and  the 
Spartans  at  one  time  adopted  iron  as  money. 

All  these  were  as  veritable  money  then  and  there  as  the  precious 
metals  have  been,  and  are,  elsewhere  and  at  other  times.  So  you 
see  any  commodity  may  be  a  medium  of  business  exchanges,  and 
is  evidently  valued  at  the  cost  of  its  production.  This  definition 
is,  therefore,  not  a  specific  designation  or  description  of  the  thing 
so  named. 

P.  Although  money,  whether  "  real "  or  representative,  is 
nothing  certain  as  to  its  substance,  it  is  always  a  medium  of  ex- 
change, effecting  indirectly  what  the  primitive  barter  does  in  the 
commerce  of  property  and  services,  and  is  always  a  standard  of 
value. 

T.  Money,  consisting  of,  or  representative  of,  any  substance 
whatever,  cannot  be  a  standard  of  value,  as  weights  and  measures 
are  of  quantities  and  dimensions.  Yard  measures  and  pound  weights 
arc  ever  the  same  in  length  and  gravity  in  the  same  latitude  all 
round  the  earth.  They  are  standards  absolute.  Gold  and  silver, 
so  far  from  being  standards  for  other  things,  do  not  even  hold  any 
fixed  relative  value  to  each  other.  Within  a  score  of  years  gold 
has  been  in  the  money  market  as  15|  to  one,  and  again  as  18  to 
one  of  silver  by  weight.  Thirty  years  ago  silver,  in  the  London 
market,  was  worth  60  pence  per  ounce  troy.  Since  that  time  it 
has  been  down  to  18  pence,  and  is  now  (1880)  at  about  52  pence. 
Has  gold  risen,  or  has  silver  fallen,  through  this  range  of  change 


MONEY.  117 

in  price  ?    No  matter  now  which.    Either  or  both  of  them,  or  any 
other  thing  may  be    a  standard  of  payment  of  debts  by  the  arbi- 
trary appointment  of  municipal  law  ;  but  this  is  a  very  different 
thing  from  a  standard  of  exchange  in  property  and  services.    The 
civil  law  must,  of  necessity,  determine  what  thing,  and  how  much 
of  it,  may  be  exacted  from  debtors,  but  cannot  direct  how  much 
of  it  shall  be  paid  for  a  bushel  of  wheat  or  a  yard  of  cloth.    Bank 
of  England  notes  in  Great  Britain,  and  greenbacks  in  the  United 
States,  are  legal  tenders  under  the  law,  and  business  people  con- 
form to  these  arbitrary  regulations  of  the  currency  ;  nevertheless, 
the  commercial  value  of  the  precious  metals,  coined  and  uncoined, 
is  fixed  by  their  cost  of  production  at  the  time,  and  the  varying 
demand  for  their  use  in  the  arts  ;  subject,  also,  to  the  influence  of 
speculation  incident  to  trade   in  them  as  commodities.     The  in- 
trinsic, or  bullion  value  of  coins,  differs  more  or  less  from  the 
nominal,  at  which  they  pass  in  trade  by  tale  ;  for,  in  all  places 
other  than  in  the  respective  countries  that  fix  their  weight,  fine- 
ness, and  names,  they  are  matters  of  merchandise,  and  subject  to 
all  its  fluctuations  in  prices. 

D.  I  have  learned,  in  the  course  of  our  discussions,  to  avoid 
answering  your  question,  What  is  money  ? — expecting,  at  every 
turn,  a  cutting-up  criticism  of  the  opinions  which  I  try  to  repre- 
sent. Yet  I  venture  to  express  some  surprise  that  you  allow  us 
no  standard  of  exchange  value,  none  by  which  to  compute  the 
worth  of  property,  the  growth  of  wealth,  or  of  equivalents  in  the 
vast  range  of  business  transactions. 

T.  Allow  me,  also,  to  be  surprised  that  you  imagine  any  such 
permanency  of  a  standard  of  valuation  in  the  exchanges  of  com- 
merce and  trade.  In  essence  and  in  action  these  exchanges  are 
only  modes  of  barter,  for  which  there  can  be  no  standard,  as  there 
is  no  medium.  Standard,  forsooth  !  Why,  there  is  none  for 
morals,  for  taste,  for  rights,  or  for  duties,  either  permanent  or 
universal  among  men,  and,  governing  their  relations  or  opinions. 
Social  commerce  is  ruled  by  an  ever-changing  measure.  In  these 
exchanges  there  is  nothing  unchangeable,  nothing  absolute,  or 
even  perfectly  known.  They  are  all  relative  to  conditions  which 
are  neither  universally  the  same,  nor  constant  in  character  any- 
where.    It  is  enough  that  they  are  wisely  adapted  to  the  passing 


118  POLITICAL    ECONOMY. 

time  and  its  special  circumstances.  Two  pence  (estimated  at  about 
thirty  cents  of  our  money)  was  the  amount  of  advance  made  by 
the  good  Samaritan  to  the  host  for  the  entertainment  of  the  sick 
and  wounded  man  that  fell  among  thieves  ;  and  two  hundred  pence 
($30)  was  estimated  by  the  Apostles  as  the  probable  cost  of  a 
dinner  for  5,000  people  in  the  desert  of  Judea.  Try  your  money 
standard  upon  these  instances  !  !  Or,  later,  and  much  nearer  our 
own  time,  the  average  money  price  of  horses  in  England,  in  the 
year  1696,  was  $12.92,  in  American  gold  of  the  year  1870.  The 
horses  now  are  something  better  for  use  and  for  style,  but  apply 
your  exchange  gauge  to  them  now  at  say  $25  each.  You  might 
as  well  measure  a  flying  cloud  on  a  windy  day  with  an  elastic 
string  as  estimate  money  values  through  the  changes  of  time, 
place,  and  circumstances  to  which  they  are  subject. 

P.  Compared  with  other  commodities,  gold  and  silver  have 
cheapened  greatly  in  the  lapse  of  generations,  and  they  have  con- 
siderably changed  in  relative  value  to  each  other  and  to  the  stand- 
ard by  money  of  account  or  nominal  value. 

T.  In  the  year  1066  the  Tower  pound  of  silver  was  coined  into 
20  shillings  (hence  20  shillings  are  still  equal  to  £1  in  computa- 
tion). These  20  shillings  were  equal  in  weight  to  18|  shillings 
of  the  Troy  pound  adopted  in  1527.  The  Troy  pound  has  since 
undergone  three  changes  by  coinage  ;  thus,  in  1553,  it  was 
coined  into  60  shillings  ;  in  1600,  62  shillings  ;  and,  in  1816,  06 
shillings.  £o,  in  800  years,  you  have  the  Troy  pound  weight  of 
silver  more  than  trebled  in  nominal  value, — that  is,  if  you  had 
contracted  a  debt  in  1066  of  twenty  shillings,  you  could  pay  it  in 
1866  with  less  than  one-third  of  the  weight  of  silver  intended  by 
the  bargain. 

P.  The  effect  of  this  change  in  the  nominal  value  of  the  metal 
is,  that  the  burden  of  old  debts,  especially  national  debts,  is 
lessened  in  the  proportion  that  the  medium  of  payment  cheapens 
in  labor-cost.  There  is  blessing  in  that  process.  The  increase  of 
a  nation's  wealth,  and  of.  the  reduced  labor-cost  of  the  money  in 
which  its  debt  must  be  paid  must,  in  the  progress  of  time,  greatly 
lessen  the  burden  of  its  debt. 

T.  Yes  ;  more  than  you  might  think.  The  interest  of  the  debt 
of  Great  Britain,  for  instance,  was  10.21  per  cent,  of  the  annual 


MONEY.  119 

product  of  its  industries  in  1816  ;  and,  in  the  following  65  years, 
has  fallen  to  4.15  per  cent.  So  you  see  that  old  debts  like  other 
things  wear  out  as  time  progresses.  They  carry  the  same  name- 
figures  while  they  last,  but  they  shrivel  with  age.  Principal  sums 
at  interest  have  been  supposed  to  burn  on  like  the  bush  that  Moses 
saw  in  the  mount,  burning  without  being  consumed.  That  is  a 
mistake.  They  were  made  by  converting  consumable  things  into 
money  of  account,  but  there  is  no  necromancy  in  the  transmigra- 
tion. They,  also,  are  things  that  perish  in  the  using.  A  man, 
by  securing  it  for  himself,  expects  to  make  a  5  per  cent,  investment 
exempt  him  and  one  successor  from  labor  forever,  because  if  5  per 
cent,  yields  them  a  sufficient  support,  the  principal  has  something 
of  immortality  that  does  not  fail  of  a  perpetual  yield  in  the  course 
of  time  ;  but,  if  that  nominal  5  per  cent,  declines,  with  the  declining 
value  of  money,  his  successors  will  have  to  be  something  better 
than  sleeping  partners  in  the  world's  business. 

I).  It  results,  then,  in  the  economy  of  earthly  affairs,  that  though 
interest  eats  like  a  canker  it  is  itself  eaten  by  its  own  rust. 

T.  It  means  that  the  world's  progress  is  not  to  be  fossilized  or 
crystallized  for  the  benefit  of  its  slow-goers  and  idlers.  Money  is 
a  fruit  of  labor  ;  unused  by  the  owner  for  the  power  of  service  in 
it,  he  must  not  complain  if  it  withers  in  the  presence  of  the  ever- 
growing activity  of  live  labor. 

P.  The  increase  that  has  occurred  in  the  production  of  the 
precious  metals  would  throw  some  light  upon  their  change  of 
value,  for  of  course  the  more  abundant  the  supply  of  any  com- 
modity the  cheaper  it  is. 

T.  Stop  there.  It  is  not  simply  abundance  of  things,  having 
intrinsic  value,  that  affects  their  market  price.  It  is  the  labor- 
cost  of  production  that  rules  their  exchange  value.  Abundance 
and  scarcity  of  supply  are  only  the  indications  of  the  variance  of 
labor-cost. 

With  respect  to  the  yield  of  the  mines,  it  will  serve  some  pur- 
pose to  look  at  the  reports  and  estimates  of  the  accepted  author- 
ities. 

It  is  believed  that  in  350  years  (from  A.  D.  1500  to  1849)  the 
product  of  silver  amounted  to  6625  millions  of  dollars,  and  of  gold 
3100  millions,  the  relative  value  being  taken  at  15|  to  1  by  weight. 


120  POLITICAL  ECONOMY. 

Starting  with  the  discoveries  in  California  and  Australia,  it  is 
estimated  that  from  1849  to  1873,  there  were  added  to  the  product 
of  silver  1550  millions,  and  of  gold  3350  millions.  To  resort  to 
better  ascertained  and  more  accurately  reported  increase  during 
the  latter  period  would  not  help  us  to  more  definite  data,  for  that 
would  only  be  comparing  a  tolerably  accurate  report  with  an  esti- 
mate that  is  merely  conjectural.  These  statements  give  us  an 
annual  average  product  of  silver  19  millions,  of  gold  9  millions 
in  the  350-year  period ;  and  for  the  later  period  of  24  years  65 
millions  in  silver  and  140  millions  in  gold,  per  annum.  These 
reports  well  enough  indicate  the  vast  increase  in  production  now 
going  on.  It  shows  an  aggregate  for  the  recent  movement  of  205 
as  against  28  in  earlier  times. 

Humboldt,  writing  before  the  California  era,  estimated  the 
metallic  money  circulating  in  Europe  at  more  than  30  times 
greater  in  the  18th  than  in  the  15th  century.  And  he  put  the 
annual  importation  from  America  into  Europe  from  A.  D.  1492  to 
1500  at  only  $250,000  yearly  ;  but  from  the  year  1750  to  1810 
it  had  grown  to  §39,900,000. 

The  production  of  the  mines  of  the  world  is  greatly  variant 
from  year  to  year  ;  and  the  relative  exchange  value  of  gold  and 
silver  increases  the  variance  of  price.  Remember  this  in  all  your 
calculations. 

It  is  estimated  by  some  writers  that  three-fourths  of  the  gold 
produced,  is  used  for  coinage,  and  one-fourth  in  the  arts.  The 
guesses  made  at  the  like  uses  of  silver  are  scarcely  worthy  of 
notice. 

The  Director  of  the  United  States  Mint  in  1879  thinks  that  one- 
half  of  the  gold  and  one-third  of  the  silver  annually  produced  from 
the  mines,  is  consumed  in  the  arts  and  manufactures. 


FUNCTIONS    OF    MONEY.  121 

CHAPTER  XII. 

FUNCTIONS  OF  MONEY. 

T.  Let  us  now  turn  to  the  functions  and  the  forms  of  money. 
In  its  offices  it  is  to  be  regarded  under  two  distinct  aspects  : — As 
an  Exchanger  of  values,  and  as  capital,  or  a  Producer  of  values. 
Money,  used  to  represent  the  value  of  other  things  in  exchange,  is 
to  be  considered  merely  as  counters,  computers,  or  numerals  ;  but, 
acting  as  capital,  it  is  a  producer  of  values  as  any  other  commodity 
is.  In  the  former  office  it  is  described  by  Adam  Smith  as  "  dead 
capital."  As  an  exchanger  it  is  a  transporter  of  property  ;  as 
capital  it  is  a  producer.     In  either  case  it  is  not  dead  or  inactive. 

D.  When  a  mill,  a  plough,  or  a  dollar  is  idle  or  unemployed, 
may  it  not  be  called  dead  to  all  intents  and  purposes  ? 

T.  Smith  speaks  of  money  in  use — his  phrase  is  dead  Capital . 
A  true  definition  of  death  is  the  state  of  being  incapable  of  action — 
"  there  is  no  work  or  device  in  the  grave."  False  and  defective 
definitions  are  full  of  mischief. 

As  a  medium  of  exchange  money  is  an  agent,  not  a  subject.  Its 
agency  intervenes  in  commerce  just  as  labor-saving  machinery  is 
employed  in  the  production  and  transportation  of  commodities,  and 
under  the  same  necessity.  Change  of  form,  including  properties 
and  of  place,  is  all  the  power  that  man  has  over  matter.  Time  and 
space  are  overcome  in  changes  of  ownership  by  the  use  of  money. 
In  the  existing  conditions  of  society  traffickers  cannot  meet  as  in 
other  times,  to  exchange  their  surplus  of  productions.  If  some 
representative  of  values,  capable  of  fitting  itself  in  amounts  to  ail 
desired  exchanges,  and  always  commanding  them,  could  be  found, 
the  aims  and  uses  of  commerce  would  be  accomplished  by  such  an 
instrument ;  and  it  would  be  at  once  an  instrument  of  barter  in 
things  and  of  association  in  the  community  of  the  dealers.  This 
predicament  suggests  the  familiar  medium  called  Money  ;  money 
in  all  its  kinds,  serving  in  the  same  uses  ;  Coined  metals,  substi- 
tute and  representative  paper — Money  of  account — Credit  money 
of  all  kinds,  each  answering  in  its  turn  better  than  any  other  in. 
circumstances  specially  adapted  to  its  use. 
9 


122  POLITICAL  ECONOMY. 

D.  Then  you  call  the  instruments  in  use,  whether  they  have  an 
intrinsic,  or  only  a  conventional  value  ;  whether  of  gold,  shells, 
circulating  notes,  drafts  or  any  other  evidence  of  debt  payable 
■which  is  suitable  for  negotiation,  money. 

T.  I  use  the  generic  term  for  all  kinds,  and  add  specific  desig- 
nations when  I  have  occasion  to  distinguish  the  substances  of 
which  they  severally  consist.  In  all  uses  of  the  word,  with  or 
without  specific  prefixes,  I  am  justified  by  the  axiom  that  things 
which  are  equal  to  the  same  thing  are  equal  to  each  other.  De- 
scribing things  by  their  kinds  and  differences  is  not  a  false  or 
doubtful  theorizing,  nor  a  begging  of  the  question  in  any  dispute 
about  them. 

P.  Among  the  things  used  to  represent  values  of  other  things, 
gold  and  silver  have  long  held  the  precedence.  Is  there  anything 
of  foreordination  in  this  preference,  and  in  the  rank  commonly 
accorded  to  them  ? 

T.  No;  their  adoption  is  due  to  their  fitness,  and  their  use 
is  prescribed  by  such  fitness;  when  they  shall  fail,  and  as  they 
shall  lose  adaptation  to  their  use,  they  will  and  must  lose  the 
rank  which  they  cannot  fill.  Some  of  their  qualities  are  specially 
adapted  to  social  conditions,  which  more  or  less  lack  business  or- 
ganization, and  where  credit  is  incompletely  established.  Their 
use  in  such  primitive  states  of  society,  while  it  relieves  some  of 
the  burdens  of  simple  barter,  or  hand-to-hand  exchanges,  still 
preserves  its  spirit.  No  trust,  no  postponement  of  payment,  no 
credit  that  can  serve  as  capital.  They  are  the  commerce  of  sav- 
ages, and  its  chief  instrument  in  barbarism. 

P.  But  they  maintain,  to  a  great  extent,  a  high  estimation  in 
civilization.  To  what  qualities  are  they  indebted  for  such  emi- 
nence among  the  mediums  of  business  transfers  of  property  ? 

T.  1st.  They  have  a  certain  approach  to  constancy  of  value, 
because  the  cost  of  their  production  does  not  vary  much  within 
the  periods  that  private  contracts  for  payment  usually  run,  or 
changes  of  prices  usually  occur. 

2d.  They  have  an  intrinsic  value.  They  are  not  of  question- 
able solvency.  They  are  the  medium  of  international  trade,  that 
is,  of  paying  its  balances,  and  are  not  subject  to  depreciation  ex- 
cept from  natural  causes.  As  there  is  no  faith  in  their  use,  so 
there  is  no  liability  to  its  violation. 


FUNCTIONS    OF    MONEY.  123 

3d.  Their  scarcity  and  high  cost  of  production  have  the  effect  of 
compacting  large  value  in  small  bulk  and  light  weight,  as  com- 
pared with  other  substances  which  have  value  in  themselves. 
Precious  stones,  indeed,  greatly  excel  them  in  these  respects,  but 
in  others  they  are  altogether  unfit  for  currency.  Their  capabil- 
ity of  storage  and  concealment  are  advantages  added  to  their  port- 
ableness,  though  they  are  in  large  amounts  almost  unmanageable. 

4th.  They  are  very  durable,  losing  nothing  by  rust,  fire,  or 
water.  They  waste  by  abrasion,  and  have  been  known  to  lose  as 
much  as  ten  per  cent,  of  their  substance  while  yet  in  circulation, 
but  they  are  in  a  good  degree  defensible  by  alloys  of  cheaper  and 
more  durable  metals.  They  are  liable,  besides,  to  the  frauds  of 
counterfeiting,  clipping,  sweating,  and  punching.  To  some  of 
these  risks  they  are  quite  as  much  or  even  more  exposed  than  are 
the  ordinary  forms  of  credit  money.  The  balance  of  security, 
however,  is  in  their  favor. 

5th.  Their  very  best  and  most  indispensable  quality  is  in  their 
divisibility  into  very  small  portions,  and  their  capability  of  restor- 
ation into  larger  ones,  with  scarcely  any  appreciable  loss.  The 
real  service  of  money  in  all  forms  and  amounts,  resting  in  its  con- 
venience, the  eminent  divisibility  of  the  precious  metals  is  their 
chief  recommendation  for  service.  This  point  is  made  impress- 
ively clear  when  small  coins  are  withdrawn  from  circulation  in  a 
suspension  of  specie  payments.  The  lack  of  five  and  ten  cent 
pieces  is  a  greater  inconvenience  than  the  absence  of  five  and  ten 
dollar  pieces,  or  bank  notes.  Banker's  checks  or  drafts  can  be 
made  to  answer  in  payment  of  large  sums,  but  we  have  seen  the 
community  driven  to  the  use  of  postage  stamps  and  horn  tokens 
upon  street-cars,  and  for  small  purchases.  With  a  three  cent  piece 
we  buy  an  infinitesimal  portion  of  the  labors  of  hundreds  of  heads 
and  hands  employed  in  the  production  of  the  daily  newspaper. 
The  fractional  currency  enables  us  to  avail  ourselves  of  the  sup- 
plies of  our  daily  and  hourly  wants.  In  this  service  coins  have 
an  indispensable  office.  They  hold  their  place  in  this  most  useful 
though  less  honored  work.  They  are  fast  being  displaced  in  the 
wholesale  and  larger  retail  business  of  the  time.  The  rule  of  fit- 
ness or  convenience  governs  in  the  choice  of  instruments  in  com- 
merce, as  in  all  other  things. 


124  POLITICAL  ECONOMY. 

CHAPTER  XIII. 

MONEY  AND  PRICES. 

P.  Does,  and  how  does,  the  quantity  of  money  in  circulation 
affect  the  prices  of  other  things, — in  an  arithmetical  or  other  cal- 
culable proportion  ?  In  this  question  lies  the  trouble  that  theorists 
are  usually  engaged  with. 

I).  If  the  laws  of  trade  maintain  equivalence  of  value  between 
commodities  and  services,  and  the  money  by  which  they  are  esti- 
mated, and  which  is  exchanged  for  them,  the  one  must  equalize  the 
other,  or  "supply  and  demand"  mean  nothing  operative  upon 
prices. 

T.  But  how  would  it  be  if  the  money  in  use,  of  whatever  kind 
or  kinds  it  may  consist,  is  at  no  time  a  representative  of  the  mass 
of  values  in  the  commodities  and  services  in  business  exchanges  ? 
Would,  then,  the  greater  or  less  quantity  of  the  medium,  as  it  is 
called,  of  itself  determine  the  exchange  value  of  everything  in 
market?  Money  is  called  a  mystery,  so  much  so  that  none- but 
the  least  skilled  in  its  laws  assume  to  know  all  about  it.  And  a 
great  deal  of  mystery  is  added  to  the  subject  by  the  "  ready-made- 
easy"  method  of  settling  its  theory. 

For  example :  It  is  held  that  the  total  amount  of  money  in  cir- 
culation represents  the  total  value  of  all  the  property  bought  and 
sold.  This  affirmed  equivalence,  however,  is  not  proved,  but  is 
absolutely  disproved. 

David  Hume,  following  Montesquieu,  80  years  ago,  produced 
this  thoughtless  assumption  ;  and,  among  others,  John  Stuart  Mill 
adopted  it  in  the  last  edition  of  his  work  on  Political  Economy. 
Mill  says :  "  The  doubling  of  the  money  in  use  would  do  no  good 
to  any  one  ;  would  make  no  difference,  except  having  to  reckon 
pounds,  shillings,  and  pence  in  greater  numbers.  It  would  be  an 
increase  of  values  only  as  estimated  in  money;"  and  he  goes  on  to 
say  that,  "  if  the  whole  money  in  circulation  was  doubled,  prices 
would  be  doubled.  If  it  was  only  increased  one-fourth,  prices 
would  rise  one-fourth." 


MONEY    AND    PRICES.  12") 

D.  If  this  be  an  utterly  untenable  opinion,  it  is  not  a  little 
strange  that  such  men  as  Montesquieu,  Hume,  and  Mill  should 
make  the  same  blunder. 

T.  Hume  and  Mill  both  did  know  ;  and  elsewhere,  when  treat- 
ing of  the  relation  of  supply  and  demand,  explicitly  contradict  it 
in  respect  to  money.  They  adopted  the  notion  that  money  is  a 
measure  of  value,  and  forgot  that,  as  an  exchanger,  it  does  not  lose 
the  character  of  being  itself  a  commodity,  subject  to  the  law  of 
labor-cost.  With  them  it  was  an  abstraction,  an  idea,  as  weights 
and  measures  are,  and  they  did  not  advert  to  the  fact  that  pound- 
weights  and  yard-sticks  do  not  enter  into  the  transfers  of  things 
which  they  measure  and  express,  while  money  is  one  of  the  things 
exchanged.  Hume  does  not  correct  his  misjudgment  in  this  mat- 
ter, but  he  abandons  and  contradicts  its  doctrine,  and  becomes 
eloquent  in  stating  the  changes  which  an  increased  influx  of  this 
supposed  mere  counter  of  other  things  effects  upon  the  activities 
of  business.  He  perceives  that  it  is  no  longer  a  fixed  equivalent 
under  all  differences  of  its  amount,  but  becomes  a  wonder-making 
stimulus  to  industry  and  commerce.  In  the  same  essay  he  says, 
"  when  money  flows  into  a  country,  everything  takes  a  new 
face,  and  labor  and  industry  gain  life  ;"  that  "  it  is  easy  to  trace 
the  money  in  its  progress  through  the  Commonwealth,  when  we 
shall  find  that  it  first  quickens  the  diligence  of  every  individual 
before  it  increases  the  price  of  labor  ;"  and,  again,  he  assures  us 
that,  when  money  decreases,  the  people  suffer,  and  "  poverty, 
beggary,  and  sloth  ensue."  Nevertheless  he  affirms  that  "  the 
quantity  of  gold  and  silver  is  in  itself  altogether  indifferent"  !!! 

Mr.  Mill,  discussing  the  effects  of  excess  and  deficiency  in  sup- 
ply of  other  things,  knows  very  well  that  gluts  do  not  proceed  in 
cheapening,  nor  deficiencies  in  enhancing,  prices  in  arithmetical 
proportion.  He  is  made  aware  that  a  ten  per  cent,  deficiency  in 
the  supply  of  wheat  raises  its  price,  not  ten,  but  thirty  per  cent.  ; 
and  that,  falling  to  one-half  or  fifty  per  cent.,  the  price  will  go  up 
to  an  advance  of  450  per  cent.  Yet,  when  he  is  talking  about 
money,  he  makes  it  go  like  clockwork  over  equal  spaces  in  equal 
times  upon  the  dial-plate  of  the  market  rates  ! 

D.  I  wish  I  could  understand  how  you  understand  the  law  of 


126  POLITICAL  ECONOMY. 

supply  and  demand  in  its  application  to  prices,  for  it  certainly  has 
some  force. 

T.  Doubtless.  Esau  sold  his  birthright  for  a  mess  of  pottage. 
His  need  had  a  life  and  death  urgency.  I  do  not  deny  even  so 
wide  a  range  of  operation  as  this  in  the  pressure  of  conditions 
upon  prices.  But  I  do  not  admit  that  things  stand  still  to  be  com- 
pared, computed,  or  valued  against  the  assumed  money  counter- 
poise. There  is  set-off,  effecting  a  hundred-fold  more  exchanges 
than  employ  anything  that  can  be  found  in  the  money  supply, 
such  as  drafts,  bills  of  exchange,  and  mutual  debt  settlements.  In 
the  clearing-house  of  the  London  banks  the  balances  do  not  ex- 
ceed five  per  cent.  ;  and  these  insignificant  balances,  though  pay- 
able, are  not  actually  paid  in  money  of  any  kind.  An  eminent 
banker  of  the  same  city,  with  operations  extending  to  millions  of 
pounds  sterling,  shows  that  less  than  three  per  cent,  of  these  im- 
mense sums  employs  coined  cash,  and  not  more  than  five  per  .cent, 
of  bank  paper.     (See  Appendix  A.) 

Furthermore,  the  gold,  silver,  and  paper  money  of  no  country 
in  the  civilized  world  approaches  the  values  exchanged  in  its 
markets.  Our  money  of  all  kinds,  never  before  the  great  Rebel- 
lion, reached  beyond  400  millions  of  dollars,  and  a  considerable 
part  of  this  amount  was  not  in  active  use  at  any  time.  Probably, 
if  the  reserves  in  banks  and  in  private  hands  were  subtracted,  not 
more  than  300  millions  would  be  left  upon  the  business  market. 
But  the  annual  products  of  industry  were  worth  at  least  4000 
millions,  of  which,  if  only  three-fourths  were  bought  and  sold,  and 
another  thousand  millions'  worth  of  real  estate  changed  ownership 
by  bargain  and  sale  ;  and  still  another  thousand  millions  were  paid 
for  professional,  educational,  personal,  and  artistic  services,  we 
have  5000  millions  to  be  paid  and  received  by  means  of  300  mil- 
lions of  money,  or  by  one  dollar  for  1»3|  times  as  much  in  ex- 
change values.  Thus  the  see-saw  equivalence  between  money  and 
property  on  sale  is  as  absurd  in  theory  as  impossible  in  fact. 

D.  You  have  counted  the  money  only  once  in  bulk,  but  one 
piece  of  money  serves  in  many  payments,  and  is  thus  multiplied  in 
work,  perhaps,  on  the  average,  16§  times. 

T.  I  have  also  valued  the  commodities  and  services  in  the  total. 
These  pass  just  as  often  as  they  are   sold  and  paid  for,  as  the 


MONEY    AND    PRICES.  127 

money  does,  which  keeps  their  exchanges  even  in  number  and 
values. 

D.  Excuse  my  dulness  of  apprehension.  It  seems  to  me  that 
you  divide  the  cash  paid  in  cash  sales  into  the  total  of  the  cash 
and  credit  sales. 

T.  Which  shows  that  the  cash  employed  is  only  equal  to  some- 
thing less  than  one-sixteenth  of  the  prices  to  'be  met,  and  must  have 
just  that  much  less  than  the  ruling  power  ascribed  to  it  by  the 
authorities  quoted  over  all  prices,  as  they  affirm.  So  far  as  it  is  a 
medium  of  payment  it  can  operate  only  upon  the  prices  of  things 
which  it  exchanges,  and  can  have  no  effect  whatever  upon  those 
in  which  it  has  no  agency. 

Let  me  now  call  your  attention  to  the  causes  of  fluctuation  in 
prices,  which  act  independently  of  the  money  supply:  Miscalcula- 
tions of  dealers  as  to  existing  and  prospective  supply  and  demand  : 
influence  of  seasons  upon  agricultural  productions;  prophecies 
concerning  the  coming  harvests  ;  changes  of  taste  and  fashion ; 
legislative  enactments  in  the  matter  of  domestic  taxation  and  import 
duties  ;  political  events  with  their  effect  upon  trade  ;  excitement 
or  depression  in  the  condition  of  other  countries  connected  with  us 
by  an  active  trading  intercourse  ;  profusion  in  good  times  and  con- 
tracted indulgences  of  consumers,  when  rigid  economy  is  compelled; 
speculation  in  the  markets,  which  never  allows  prices  a  rest  at 
their  natural  rates.  These,  and  a  multitude  of  such  influences  of 
the  passions  of  men  are  constantly  in  play  upon  things  in  possession. 
To  them  must  be  added  the  disturbing  agency  of  the  producing 
industries,  such  as  new  and  cheaper  means  of  manufacture;  cheap- 
ening effects  of  substitutes  ;  larger  or  smaller  products  from  the 
mines,  soils,  and  Avaters;  cheaper  transportation;  new  or  enlarged 
markets  opened  abroad — all  of  which  are  ordinary  events.  The 
occasional,  are  wars  either  at  home  or  abroad,  with  their  blockades 
and  embargoes. 

Will  any  one,  who  comprehends  in  any  tolerable  degree  the  force 
of  these  operative  causes,  undertake  to  measure  their  activity  and 
various  degrees  of  intensity,  so  as  to  say  that  he  can  duly  value 
the  whole  of  them  or  any  of  them  ?  Especially  will  he,  in  the  face 
of  this  complex  array,  credit  the  money  in  use  with  an  overruling 
and  exclusive  control  ?     As  well  might  the  problems  of  astronomy 


128  POLITICAL  ECONOMY. 

be  solved  by  the  state  of  the  weather,  as  those  of  prices  in  trade  by 
the  quantity  of  active  currency,  or  the  state  of  the  money  at  com- 
mand by  the  ever-changing  market  rates. 

P.  We  are  familiar  with  the  effect  of  monopolies,  such  as  that 
of  the  French  government  in  the  tobacco  trade,  a  mode  of  taxation 
upon  consumption  which  enormously  enhances  its  price  in  France, 
and  greatly  reduces  it  to  the  American  producer.  Tiie  high  tariff 
rate  upon  it  in  England  has  the  like  effects,  which  in  neither  case 
depends  upon  the  stock  of  money  in  either  of  the  countries  engaged 
in  the  trade  ;  and,  it  appears  to  me,  clearly,  that  things  and  move- 
ments so  largely  governed  by  opinions,  passions,  hopes,  fears,  and 
the  casual  necessities  of  life,  cannot  fall  within  the  rules  of  arith- 
metic, or  of  comprehension,  or  prediction,  as  the  business  affairs 
of  beavers  and  bees  probably  are  to  them.  The  doctrine  of  an 
exact  equivalence  and  counterpoise  of  money  and  trade  values  is 
as  symmetrical  as  logic  can  make  it,  but  it  bears  no  relation  to  the 
facts  which  it  is  thought  to  embrace  and  explain. 

I).  When  people  think  of  prices,  is  not  the  medium,  the  currency, 
in  which  they  are  expressed,  constructively  present ;  and  if  so,  is  not 
the  stock  or  fund  of  money  potentially  involved  and  operative  in 
the  valuation? 

T.  No.  When  skins  are  exchanged  for  fish  in  simple  barter 
among  savages,  they  are  not  valued  by  a  substantive  standard. 
Their  worth  is  ideal,  and  is  so  compared.  In  civilization  men  think 
only  of  the  relations  of  worth  between  the  things  exchanged, bought, 
and  sold.  If  they  mentally  compute  the  respective  values  by  dol- 
lars, or  weights,  or  measures — they  no  more  think  of  the  number 
of  dollars  in  the  market  than  of  the  number  of  pound-weights  or 
yard-sticks  which  dealers  employ.  If  it  be  dollars  they  are  buy- 
ing, they,  also,  are  ideal  values  of  the  uses  they  may  serve,  which 
have  no  standard  of  purchasing  power  over  other  things.  Goods 
are  not  valued  by  the  ships  and  wagons  that  transport  them.  These 
are  mediums  of  transportation,  and  so  is  money.  It  serves  in  cal- 
culations as  the  numerals  one,  two,  three,  or  inches,  yards,  and 
tons  do  in  measuring  quantities.  It  is  an  instrument,  not  a  subject 
of  exchanges  ;  for,  in  its  condition  of  money,  it  is  only  a  sign,  a 
token,  an  algebraic  symbol,  and  has  no  other  use  or  office  in  the 
transaction.     It  is  another  kind  of  money — money  of  account  that 


MONEY    AND    PRICES.  129 

mediates  effectively  in  contracts— a  money  that  is  embodied  in 
inscriptions  upon  paper  in  debits  and  credits  ;  and  the  money  of 
currency  is  the  representative  of  as  much  of  this  money  of  account 
as  it  covers,  and  its  function  as  a  representative  of  money  of  account 
is  that  of  a  conveyor  of  property,  nothing  else.  If  business  were 
perfectly  organized,  no  more  currency  could  be  required  than 
enough  for  the  settlement  of  balances,  say,  if  you  please,  10  per 
cent.,  if  that  be  the  average  amount  of  profit,  and  so  would  not  be 
anything  like  the  measure  or  the  equivalent  of  values  in  exchange. 
As  affairs  are  now  conducted  money  of  all  kinds,  usually  meant  by 
the  word  coin  and  credit  money,  does  not  exceed  10  per  cent,  of 
the  property  and  services  transferred. 

D.  Your  theory  seems  to  me  so  metaphysical  that  I  do  not 
readily  grasp  it,  and  it,  therefore,  hardly  describes  the  mental 
process  of  the  incurious  and  unskilled  in  matters  psychological. 

T.  The  most  common  understandings  and  most  ordinary  mental 
methods  are  as  far  above  the  range  of  matter  of  fact  as  are  those  of 
philosophers.  Their  eyesight  does  not  limit  their  mental  vision 
any  more  than  it  does  yours  or  mine.  Their  reveries  and  reflec- 
tions are  as  remote  from  the  material  things  which  are  the  subjects 
of  their  thoughts.  There  is  an  efficient  metaphysics  in  all  men's 
thoughts  that  is  not  counted  upon  in  the  philosophy  of  cipherers. 

P.  Our  difficulty  of  apprehension  and  hesitation  in  the  accept- 
ance of  your  prelections  occasion  diversions  in  these  discussions. 
Breaking  away  from  these  interruptions,  let  us  have  the  promised 
testimony  of  the  experts  who  are  deemed  to  be  safe  guides  in  our 
inquiries. 

T.  Any  tolerable  approach  to  ah  adequate  presentment  of  the  life- 
time labors  of  William  Jacobs,  Arthur  Young,  Thomas  Tooke,  and 
Stephen  Colwell,  within  our  little  compass  of  limits,  would  be  like 
the  compression  of  the  globe  into  the  dimensions  of  a  nutshell.  I 
prefer  to  give  the  summary  results  of  their  labors,  which  must 
answer  our  purpose,  as  it  is  stated  by  Mr.  Colwell  (Ways  and  Means 
of  Payment,  p.  565)  :  "  The  average  prices  of  the  16th  century 
were  only  an  advance  of  21  per  cent,  over  those  of  the  15th,  whilst  an 
addition  of  380  per  cent,  had  been  made  to  the  stock  of  the  precious 
metals  ;  the  average  prices  of  the  17th  century  were  advanced  80 
per  cent,  over  those  of  the  16th,  and  the  addition  to  the  stock  of 


180  POLITICAL    ECONOMY. 

the  precious  metals  was  875  per  cent. ;  the  average  prices  of  the 
18th  century  over  those  of  the  17th  were  an  advance  of  11  per 
cent.,  and  the  addition  to  the  stock  of  the  precious  metals  1120  per 
cent.  To  make  the  case  more  striking,  the  prices  of  the  18th 
century  over  those  of  the  15th  were  an  advance  of  108  per  cent., 
whilst  the  addition  to  the  stock  of  the  precious  metals  in  the  three 
centuries  had  been  1120  per  cent.  It  is  to  be  noticed  that  the 
average  prices  of  the  17th  century  over  those  of  the  loth,  which 
covered  a  period  before  the  use  of  paper  currency,  exhibit  an 
advance  of  111  per  cent.,  whilst  the  average  prices  of  the  18th 
century,  in  which  there  was  a  great  use  of  paper  currency, 
besides  the  immense  increase  of  the  precious  metals  (1120  per 
cent.),  present  an  increase  over  the  17th  of  only  11  per  cent." 

According  to  the  investigations  of  Young  and  Jacobs,  prices 
advanced  from  the  15th  to  the  end  of  the  18th  century  2|  times, 
and  the  precious  metals  Of  times. 

P.  What  think  you  of  these  reports  or  estimates  ? 

T.  I  believe  that  the  researches  of  Arthur  Young  are  as  good, 
and  certainly  as  faithfully  made,  as  the  nature  of  his  subject — 
prices — admits.  Of  Jacobs,  on  the  production  and  employment 
of  the  precious  metals  as  money,  I  must  say,  with  J.  R.  McCul- 
loch,  that  it  is  the  best  yet  produced,  but  still  defective,  and  so 
far  erroneous.  There  is  no  practical  means  of  counting  or  calcu- 
lating the  coin  in  use  at  any  time.  Moreover,  with  respect  to  the 
prices  by  Young,  it  is  to  be  observed  that  they  are  necessarily 
averages  of  sums  widely  variant  in  labor  wages.  For  instance,  in 
the  north  and  south,  and  again  in  the  east  and  west  of  England, 
they  range  considerably  even  in  adjoining  counties,  and  at  differ- 
ent distances  from  London  ;  and  in  all  districts  they  vary  much 
for  the  summer  and  winter  months,  and  the  tables  given  are, 
therefore,  only  averages  of  averages. 

Besides,  however  nearly  Young's  items  may  approximate  the 
actual  rates,  the  estimated  results  used  in  comparison  of  the  dif- 
ferent centuries  given  in  his  tables,  the  items  are  not  identical. 
They  are  the  prices  of  somewhat  unlike  commodities ;  thus, 
horses,  coals,  provisions,  etc.,  are  given  for  some  of  the  centuries, 
but  not  for  all  of  them.     But  what  is  to   be  done  by  ciphering 


MONEY    AND    TRICES. 


181 


among  cipherings,  and  among  difficulties  such  as  are  inseparable 
from  such  explorations  as  these  ? 

P.  Is  there  nothing  more  exact  and  more  reliable  in  any  of 
the  authorities  than  in  those  which  you  have  cited  ? 

T.  Thomas  Tooke,  author  of  the  history  of  prices  and  of  the 
state  of  the  circulation,  from  1793  to  1857,  in  six  octavo  volumes, 
of  whose  works  Mr.  Colwell,  one  of  the  most  competent  reviewers, 
and  himself  one  of  the  best  authorities,  says  :  "  It  has  no  equal 
in  any  department  of  political  economy  for  indefatigable  research, 
for  patient  analysis,  for  the  extent  and  variety  of  facts  on  which 
its  conclusions  are  based,  for  fulness  of  illustration,  and  for  lucid 
arrangement."  Mr.  Colwell  adds  that  he  is  "  not  aware  that  any 
respectable  attempt  had  been  made  to  refute  its  conclusions  or  to 
weaken  its  authority,  although  its  main  object  and  undeniable 
result  has  been  to  contradict  many  cherished  positions  of  leading 
economists  and  theorists  of  the  present  and  past  generations."  In 
an  examination  and  severe  cross-examination  before  a  committee  of 
the  House  of  Commons  in  1832,  and  in  a  discussion  pressed  upon 
him  by  well-prepared  opponents,  he  forced  the  conclusion  that 
"  the  details  given  by  him  were  accurate  as  to  time,  and  as  nearly 
as  possible  accurate  as  to  amounts." 

The  testimony  of  Mr.  Tooke,  so  qualified  to  speak,  is  in  his  own 
words ;  speaking  of  the  great  fluctuation  of  prices  which  took  place 
between  1792  and  1858  (66  years),  which  were  the  greatest  that 
have  ever  occurred  in  the  history  of  commerce  and  trade,  he  says: 
"The  alteration  of  prices  originated,  and  mainly  proceeded  from 
alterations  in  circumstances  distinctly  affecting  the  commodities, 
and  not  in  the  quantity  of  money."  He,  therefore,  condemns  as 
wholly  erroneous  a  resort  to  the  state  of  the  currency  for  a  solu- 
tion of  the  phenomena  of  prices.  He  does  not  deny  that  an  in- 
crease of  money  may  have,  in  special  instances,  a  tendency  to 
enhance  prices,  or,  that  all  other  things  being  equal,  it  would  not 
in  all  instances  have  that  tendency ;  but  he  holds  that  the  quantity 
of  the  currency  is  not  in  itself,  a  regulator  of  prices,  these  being 
mainly  determined  by  facts  and  circumstances  peculiar  to  the  com- 
modities so  affected ;  and  that  these  circumstances  do  frequently 
operate  with  such  force  as  to  reduce  prices  in  the  face  of  an  ex- 


132  POLITICAL    ECONOMY. 

panding  currency.    In  point-  of  fact  the  expansion  of  the  currency 
is  frequently  the  effect,  and  not  the  cause  of  enhancing  prices. 

P.  Have  you  anything  nearer  home,  and  more  recent  in  the 
relative  changes  of  prices  and  quantity  of  the  currency  which 
bears  directly  on  the  question  at  issue  ? 

T.  I  have  selected  from  a  treasury  report  of  1863,  twenty 
staple  articles,  which  was  a  selection  from  sixty  representative 
articles  in  the  New  York  price  lists.  An  examination  of  the 
prices  of  these  sixty  articles  on  the  1st  of  May,  1855,  and  of  1860, 
shows  a  decrease  in  thirty-five  of  them,  ranging  from  44  to  12  per 
cent.  Several  others  of  the  remaining  twenty-five  showed  a 
slight  decline,  or  stood  at  the  same  price  at  both  dates.  None 
but  molasses,  sugar,  window-glass,  wool,  Liverpool  salt,  coffee,  and 
cotton  had  risen,  and  they  but  little. 

During  the  period  of  this  great  decline  of  prices,  the  bank  note 
circulation  increased  from  187  to  207  millions  (equal  to  10.7  per 
cent.)  ;  the  bank  deposits,  which  are  also  currency,  increased  from 
T.MI^-j.  to  253^  millions  of  dollars,  equal  to  33.3  per  cent.,  to- 
gether increasing  the  effective  fund  for  commercial  use  22  per 
cent,  in  that  five  years  ;  to  which  must  be  added,  according  to  the 
theory  of  money  equivalence,  all  the  gold  and  silver  thrown  in  the 
interval  into  the  channels  of  trade,  which  could  not  be  less  than 
55  per  cent,  (the  increase  in  the  coins  in  the  banks  was  55  per 
cent.).  Putting  these  money  funds  together — bank  notes,  depos- 
its, and  specie,  we  have  a  purchasing  stock  of  544J  millions  in 
1860,  against  431^  millions  in  1855 — an  increase  of  26^  per 
cent,  against  a  decrease  in  prices  ranging  from  44  down  to  12  per 
cent,  in  the  chief  staple  articles  on  the  market. 

P.  The  decline  of  prices  in  face  of  the  increase  of  money  is 
very  great.  Might  I  guess  that  this  decline  was  as  much  as  25 
per  cent.  ? 

T.  You  may  guess,  but  you  cannot  calculate  or  count  the  ag- 
gregate average,  unless  you  had  the  quantities  of  each  article 
sold  in  1855  and  1860;  and  these  quantities  cannot  by  any  means 
be  ascertained  of  sixty  staples,  with  many  of  them  in  half  a  dozen 
forms ;  but  the  exhibit  certainly  shows  a  great  decline  of  prices 
under  a  great  increase  of  purchasing  funds. 


MONEY    AND    PRICES.  133 

D.  Prices  certainly  rose  after  the  discovery  of  the  mines  of 
California  and  Australia,  between  1850  and  1860. 

T.  And  fell  again  as  much  after  the  effect  of  the  influx  of  coin 
and  the  speculation  attending  it  in  the  period  1850-55.  Even 
while  ten  of  the  articles  given  in  the  treasury  report  rose  consid- 
erably between  1850  and  1855,  seven  others  of  them  decreased 
very  greatly ;  and  while  eleven  articles  decreased  in  price  between 
1855  and  1860,  six  went  down  from  two  to  twenty-three  per  cent, 
under  the  like  influence  of  the  currency,  if  it  had  such  influence. 
These  facts  plainly  sustain  Tooke's  conclusion  that  the  state  of  the 
currency  is  not  the  regulator  of  prices,  and  that  these  are  mainly 
determined  by  facts  and  circumstances  peculiar  to  the  commodities 
themselves. 

P.  Oh,  bother  the  statistics.  Did  not  my  father  pay  twenty- 
five  cents  for  a  yard  of  muslin,  which  I  can  buy  for  a  quarter  of 
the  sum  ?  Didn't  he  pay  a  dollar  or  two  for  a  crayon  portrait, 
and  I  can  get  a  better  photograph  for  twenty-five  cents ;  because, 
forsooth,  money  is  four  times  as  plenty  now  ;  but  in  spite  of  that 
plenty,  I  must  pay  four  times  as  much  for  a  day's  labor  as  he  did 
fifty  years  ago.  What  nonsense  is  this  money  measure  of  com- 
modity values ! 

T.  Keep  your  temper,  my  boy,  and  don't  treat  fools  as  they 
deserve.  If  you  ever  get  into  the  discussion  you  will  have  Mon- 
tesquieu, Hume,  and  Mill  put  at  you  as  gravely,  solemnly,  and 
seriously  as  if  their  logic  meant  something.  Don't  you  know  that 
the  Aristotelian  syllogism  proves  that  you  are  a  goose  ? 

P.  But  I  don't  feel  the  feathers,  and  I  have  not  the  web-feet 
to  waddle  on  the  land  or  swim  in  the  water. 

T.  Then  you  don't  feel  the  force  of  the  logic  that  begs  the  pre- 
mises and  forces  the  conclusion,  and  lets  the  facts  take  care  of 
themselves,  if  they  can. 

D.  That  really  sounds  like  profanity.  The  Jews  held  it  to  be 
blasphemy  to  speak  against  Moses.  How  did  Montesquieu  expose 
himself  to  such  severity  of  criticism  ? 

T.  Hear  him  as  he  committed  himself  in  his  "  Spirit  of  Laws," 
book  xxii.,  chapter  vii.  There  he  says:  "If  we  compare  the 
mass  of  gold  and  silver  in  the  world  with  the  whole  of  the 
commodities,   it    is    certain    that  every   commodity  in    particular 


134  POLITICAL    ECONOMY. 

may  be  compared  with  a  certain  portion  of  the  entire  mass  of 
gold  and  silver.  As  the  whole  of  the  one  is  to  the  whole  of  the 
other,  a  portion  of  one  will  be  to  a  portion  of  the  other.  Prices 
are  fixed  at  a  rate  compounded  of  the  whole  of  the  commodities 
with  the  whole  of  the  signs,  and  that  of  the  whole  of  the  commo- 
dities in  the  channels  of  trade  with  the  whole  of  the  signs  (gold 
and  silver)  employed  as  money.  The  establishment  of  prices 
depends  always  fundamentally  upon  the  proportion  of  the  total  of 
the  commodities  to  the  total  of  the  signs."  There,  now,  did  you 
ever  see  the  premises  more  boldly  begged  than  in  this  syllogism  ? 

P.  I  think  we  have  enough  of  these  theorists,  and,  excuse  me, 
more  than  enough  of  the  counter-argument. 

T.  We  shall  have  to  encounter  them  again  and  again,  for  we 
have  not  yet  considered  the  subject  of  credit-money,  and  the 
functions  and  policy  of  banks  and  institutions  that  issue  it. 

P.  By  the  way,  there  intrudes  just  here,  I  think,  the  subject 
of  mono-metallic  and  bi-metallic  currency,  or  money.  Are  you 
disposed  to  take  it  up  ? 

T.  It  is  in  place  now  to  consider  it,  which  we  must  do  very 
briefly. 


CHAPTER  XIV. 
STANDARDS— GOLD  OR  SILVER,  OR  BOTH. 

T.  Our  inquiries  are  not  a  circular  hunt  in  statistics.  We  are 
not  making  invoices  of  an  itemized  arithmetical  toy-shop.  We 
must  use  numbers  in  the  expression  of  quantities,  but  the  facts 
which  we  hunt  for  among  figures  are  only  those  which  tend  to 
make  evident  the  truths  that  rule  in  affairs.  I  wish  I  had  the 
skill  to  array  those  which  I  must  use  in  efficient  forms.  Every- 
thing of  use  in  them  depends  upon  the  way  in  which  they  are 
mustered,  and  the  accuracy  of  their  aim  in  the  conflicts  of 
opinion.  I  am  as  weary  of  their  employment  as  a  schoolboy  is 
of  grammar  on  the  eve  of  a  holiday.  The  question  of  a  mone- 
tary standard  in  the  precious  metals,  and  especially  in  the  disputes 
about  it,  cannot  be  settled  without  a  reference  to  the  quantities 
and  conventional  values  of  the  metals  in  use. 


STANDARDS  — GOLD    OR    SILVER,    OR    BOTH.  135 

P.  I  should  like  you  to  take  the  clirectest  route  to  the  Q.  E.  D. 
of  the  problem,  and  in  its  light  see  the  proofs  and  the  objections 
that  must  otherwise  obstruct  a  first  view  of  the  subject. 

T.  You  want  an  abstract  of  the  general  principles  that  settle 
the  conclusions  first,  and,  if  need  be,  an  exploration  of  data  and 
details  afterwards.  Let  us  try  that  method  and  see  what  will 
come  of  it. 

D.  Does  not  the  inquiry  turn  upon  the  policy  of  a  fixed  or 
arbitrary  standard  of  values  in  commerce  ?  And  have  not  eaeh 
of  the  two  precious  metals  answered  the  need,  sometimes  jointly 
and  sometimes  exclusively  ?  And  is  not  the  adoption  of  either  or 
both  a  matter  of  convention,  custom,  or  law,  and  is  it  not  so  set- 
tled without  the  use  of  tally-sticks  in  the  discussion  ? 

T.  You  are  getting  into  danger— the  danger  of  admitting  that 
the  true  money  is  the  ideal,  or  money  of  account,  which  has  no 
material  substratum  ;  in  effect,  you  are  perhaps  unintentionally 
avowing  the  doctrine  of  fiat  money,  and  building  an  arbitrary 
money  standard  upon  nothing  tangible,  by  legislative  arrogance. 
Indeed,  legal  tender  has  something  of  this  in  its  assumptions. 

This  doctrine  applies  only  to  a  standard  without  a  substance 
supporting  it,  and  not  at  all  to  things  having  in  themselves  a  com- 
mercial value.  The  bullion  of  coin  has  an  exchange  value  and 
its  price  is  determined  by  the  labor-cost  of  its  production,  and  to 
whatever  accidents  it  is  subject  in  common  with  other  commodi- 
ties of  the  market. 

P.  Now  I  understand  that  lawful  money,  whether  of  metal  or 
of  paper,  is  only  a  standard  in  payment  of  subsisting  debts,  and 
is  not  a  standard  of  prices  in  contracts. 

T.  The  bullion  in  coins  of  the  same  substance,  whether  of  o-0ld 
or  silver,  varies  in  cost  of  production,  and,  therefore,  in  market 
price,  and  obviously  the  coins,  or  the  bullion  in  them,  bear  no 
constant  proportion  to  each  other,  which  consideration  disposes  of 
the  question  of  bi-metallism  conclusively  on  the  ground  of  natural 
value. 

P.  Is  there  so  much  variance  in  the  prices  of  the  two  metals 
as  greatly  affects  their  equivalence  ? 

T.  Isabella  of  Spain,  in  1497,  fixed  the  ratio  of  silver  to  o-0ld 
at  lOf  to  1 ;  Elizabeth  of  England,  in  1560,  put  it  at  11  to  1  • 


136"  POLITICAL   ECONOMY. 

France,  in  1785,  determined  the  ratio  at  15  J  to  1 ;  and  the  United 
States  raised  it  to  16  to  1  in  1834.  But  the  market  prices  at 
London  were,  in  18T0,  60|  pence  in  gold  for  an  ounce  troy  of 
silver,  and  in  1878  50|  pence.  It  has  fallen  within  eight  years 
to  49 J  pence,  and  during  the  last  year  (1879)  it  has  ranged  from 
52  to  53  pence. 

Now,  did  gold  rise  in  exchange  value,  or  did  silver  depreciate  ? 
or  did  the  one  rise  somewhat  and  the  other  fall  to  make  the  dif- 
ference ?     And  in  either  case,  what  becomes  of  your  standard  ? 

But  we  have  another  trouble  to  meet.  The  director  of  the  mint 
says  that  as  prices  have  not  advanced  above  those  of  50  years  ago 
the  annual  supply  of  the  precious  metals,  although  increased  five- 
fold, is  not  excessive,  nor  more  than  sufficient  to  satisfy  the 
world's  present  needs  for  coinage  and  manufactures,  and  has  not 
inflated  prices  by  depreciating  money.  And  the  London  Econo- 
mist believes  that  the  great  increase  of  the  gold  production  has 
not  more  than  met  the  vast  increase  of  commerce  which  it  stimu- 
lated in  the  last  thirty  years.  Do  you  perceive  how  little  the  fig- 
ures of  quantities  and  conventional  values  help  us  in  establishing 
the  ratios? 

D.  Then,  after  all,  there  is  something  of  the  ideal  even  in  the 
accepted  exchange  value  of  hard,  substantial  money. 

T.  Settle  that  question  as  you  may,  the  ever-varying  price  of 
gold  and  silver  is  conclusive  that  they  do  not  so  accord  that  they 
can  be,  either  separately  or  together,  one  and  the  like  standard 
or  unit  of  estimation  in  the  exchanges  of  trade. 

P.  The  principle  or  policy  of  legislative  rule  in  the  legal  stand- 
ard of  money  has  been  extended  to  other  commodities  ;  as  in 
England,  where  the  wages  of  labor  were  fixed  by  Parliament  at 
certain  rates ;  and  by  other  governments,  in  limiting  the  price  of 
provisions  in  times  of  scarcity.  Even  some  of  the  States,  during 
our  revolution  in  the  last  century,  prescribed  punishment  for 
venders  of  goods  charged  at  higher  rates  for  Continental  money 
than  for  payment  in  gold  and  silver ;  and  the  Sumptuary  laws  of 
England,  intended  to  restrain  expensiveness  in  the  cost  of  living, 
<>r  to  compel  the  use  of  commodities  of  home  production,  had 
in  them  something  of  the  principle  on  which  legal  tender  is 
grounded. 


STANDARDS — GOLD    OR    SILVER,    OR    BOTH.  137 

T.  The  most  of  these  legislative  interferences  in  exchange  values 
have  been  abolished  for  their  weakness  and  unprofitableness,  ex- 
cept in  the  matter  of  the  payment  of  debts,  where  a  restraining 
provision  is  necessary  to  prevent  oppression  by  creditors.  Legal 
tender  has  this  use  and  office,  but  it  cannot  affect  values  in  pur- 
chases and  sales,  except  to  some  extent  indirectly.  Thus  the 
trade  dollar,  which  has  in  it  7|  grains  more  silver  than  the  stand- 
ard dollar  of  the  Mint,  has  yet  fallen  to  a  discount,  because  not 
received  at  its  intrinsic  value  at  the  Treasury,  or  made  lawful  in 
the  payment  of  debt. 

P.  How  does  quantity  of  these  metals  thrown  upon  the  market 
affect  their  relative  values  ? 

T.  Not  so  much  as  the  pet  doctrine  of  supply  and  demand 
would  lead  you  to  infer.  The  Director  of  the  Mint  adopts  the 
estimate  of  the  production  made  by  a  famous  German  statistician, 
thus : — 

The  world's  production  of  silver  in  the  24  years,  1849  to  1873, 
valued  at  15|  to  1  of  gold,  amounted  to  31f  per  cent,  of  the  total, 
and  of  the  gold  to  68f .  But  the  annual  supply  of  gold  in  the 
three  countries  which  produce  four-fifths  of  the  world's  supply 
(United  States,  Australia,  and  Russia),  reached  its  maximum  in 
the  year  185G.  The  total  of  that  year  was  134  millions  of  dollars  ; 
in  1876  it  was  90  millions ;  in  1878,  99  millions,  and  in  1879,  87 
millions.  But  of  late  years  the  production  of  silver,  which  was 
less  than  one-half  of  that  of  gold,  in  the  14  years  ending  in  1873, 
has  by  the  decline  of  the  gold  yield  and  the  increase  of  the  silver, 
approximated  very  nearly  to  that  of  gold,  measured  as  15  J  to  1. 
In  the  6  years  1874-1879  the  gold  from  our  United  States  mines 
aggregates  244  millions,  and  the  silver  nearly  234  millions,  and 
the  Director  estimates  the  yield  of  silver  for  1879  (included  in  the 
6  year  period)  at  an  excess  of  two  millions  over  that  of  gold. 
Putting  the  price  of  market  commodities  in  1870  at  $1.00,  he 
states  that  in  gold  they  have  declined  to  86t7-q  cents,  and  have 
risen  (in  1879)  in  silver  to  $L03,  with  fluctuations  in  the  inter- 
mediate years. 

Here  there  seems  to  be  some  effect  of  quantity  upon  exchange 
value,  as  it  appears  .also  in  the  fact  that  our  standard  dollar  sells 
now  at  about  88  cents  in  gold  value  in  London.  Legal  tender  in 
10 


138  POLITICAL  ECONOMY. 

the  United  States  interferes  with  the  natural  equation  of  prices, 
as  the  wages  of  society  do  in  Europe  and  Asia,  so  that  no  one 
can  tell  the  exact  effect  of  quantity  upon  market  prices.  But  all 
the  facts  show  the  impossibility  of  equating  silver  and  gold  money 
by  convention  or  arbitration.  Just  as  long  as  things  of  unlike 
labor-cost,  and  the  resulting  unlike  market  price,  are  made  subject 
to  an  endeavor  at  equilibrium  in  any  ratio  of  weights  or  quantity, 
the  impracticability  of  the  effort  clings  to,  and  must  defeat  it. 

I).  The  necessity  or  the  convenience  of  a  metallic  medium  of 
exchange,  which  does  not  depend  upon  the  good  faith  or  the  sol- 
vency of  the  issuing  party,  as  all  credit  money  does,  obliges  you 
to  be  a  mono-metalist.  Do  you  adopt  gold,  as  England  has  done 
during  the  greater  part  of  the  present  century,  or  silver,  as  the 
East  Indies  have  had  it,  time  out  of  mind  ? 

T.  England  chooses  gold  as  a  preferred  metallic  currency,  be- 
cause, being  about  fifteen  times  lighter  at  the  usual  commercial 
value,  it  serves  so  much  the  better,  when  it  must  be  used,  for  her 
immensely  large  requirement  of  coin.  India  has  not  an  equal 
necessity  for  great  values  in  little  bulk  to  cover  the  demands  of  her 
trade  with  foreign  nations ;  that  is,  she  requires  so  much  less  of 
the  money  of  the  world  in  either  kind,  that  with  other  reasons 
she  can  manage  with  the  weightier  metals.  She,  however,  has 
suffered  terribly  within  the  last  two  or  three  years  by  the  deprecia- 
tion of  silver  in  the  markets  of  foreign  nations.  But,  to  the  other 
point  involved  in  your  question — I  answer  that  neither  England 
nor  India  is  so  far  in  similar  conditions  with  the  United  States  in 
respect  to  monetary  affairs,  that  either  of  their  usages  indicates 
the  best  policy  for  us. 

D.  Would  not  general  commerce  be  as  much  benefited  by  a 
uniform  standard  of  money  values  in  all  countries,  as  by  the 
adoption  of  corresponding  weights  and  measures  in  merchandise  ? 

Congresses  have  assembled,  and  experts,  statesmen,  and  jour- 
nalists, are  in  a  persevering  endeavor  to  induce  and  arrange  a  con- 
formity of  the  commercial  nations  by  the  establishment  of  a  common 
standard  of  the  coins  in  use. 

T.  Merchants  are  a  universal  commonwealth,  they  are  not  pa- 
triots ;  they  are  cosmopolitans,  and  theorists  are  their  oracles. 
Accordingly  their  conventions  come  to  nothing.    The  Latin  nations 


STANDARDS — GOLD    OR    SILVER,    OR    BOTH.  139 

have  only  gone  so  far  in  equipoising  the  metals  as  restricting,  but 
at  the  same  time  allowing,  themselves  to  coin  and  circulate  a  certain 
quantity  of  silver  coins  at  their  nominal  value.  That  amounts  to 
a  surrender  of  the  question  to  settlement  by  the  usages  of  each 
people.  They  have  done  nothing,  and  can  do  nothing,  to  fix  a 
determinate  relation  of  value  between  silver  and  gold. 

I).  You  hold  coined  money  to  be  a  commodity,  and  yet  you 
would  hinder  or  embarrass  commerce  in  that  kind,  while,  I  suppose, 
you  would  favor  it  in  other  commodities. 

T.  A  sound  policy  of  foreign  trade  looks  to  and  provides  for  all 
exchanges  of  industrial  products  which  are  mutually  advantageous 
to  the  parties  concerned  in  it.  But  there  is  a  domestic  condition 
of  monetary  affairs  that  must  not  be  sacrificed  to  the  supposed 
advantages  of  international  trade. 

I).  Are  the  true  interests  of  one  nation  in  anywise  incompatible 
with  those  of  the  rest  of  the  world  ? 

T.  The  true  interests  of  one  people,  wisely  guarded  and  effi- 
ciently promoted,  must  redound  to  the  well-being  of  all  others  with 
which  they  have  dealings;  and  the  wrongs  and  injuries  of  one  are. 
in  the  long  run,  reflected  upon  all  the  others. 

I).  The  men  of  the  Revolution  asserted  that  all  men  were  created 
equal,  and  it  seems  to  me  that  in  all  intercourse  our  fellow-men 
should  be  regarded  and  treated  accordingly. 

T.  Oh,  my  dear  sir,  the  Declaration  of  Independence  does  not 
commit  itself  to  the  notion  that  all  men,  through  their  whole  life, 
shall  continue  equal  in  their  business  conditions  and  relations— 
that,  because  they  were  born  babies,  they  must  never  grow  out  of 
the  level  condition  of  babyhood,  or  that  the  brightest  of  them  in 
maturity  shall  treat  the  slow-goers  as  yoked  with  them  step  by 
step.  That  is  an  equality  that  nature  knows  nothing  of.  Cosmo- 
politanism, even  at  its  wildest,  cannot  so  merge  and  smother  indi- 
viduality in  community.  Cosmopolitans  who  are  only  logicians, 
and  for  the  most  part  mere  word-mongers,  find  it  easier  to  make  a 
world  for  their  system  of  government  than  to  find  a  system  of 
government  fitting  the  world  as  it  is. 

P.  I  am  waiting  for  the  reasons  why  the  money  policy  of  a 
particular  nation  is  governed  by  a  rule  necessarily  different  from 
the  requirements  of  its  foreign  trade  in  other  commodities. 


140  POLITICAL  ECONOMY. 

T.  In  regard  to  credit  money — -paper  money — it  may  be  said 
that  it  has  little  or  no  international  uses.  It  is  gold  and  silver  that 
are  the  money  of  the  world,  and  it  is  in  respect  to  them  that  uni- 
formity of  relative  value  is  in  question. 

All  the  kinds  of  credit  money  are  exempt  from  direct  foreign 
influences,  because  they  are  not  world's,  but  national  money. 
These  are  out  of  the  reach  of  international  congresses,  and  so  are 
safe  from  the  meddlings  of  speculative  theorists,  who  have  taken 
the  whole  planet  into  their  providential  jurisdiction.  But  metal- 
lic money  stands  exposed  to  their  interference,  and,  accordingly,  it 
is  tampered  with  from  one.  end  of  the  globe  to  the  other  by  those 
who  have  any  sort  of  motive  for  reforming,  deforming,  or  conform- 
ing it  to  their  several  standards  of  opinions.  We  insist,  however, 
that  although  the  precious  metals  are  a  world's  money,  they  are 
none  the  less  a  national  money,  just  as  we  may  say  of  a  man  that 
he  is  one  of  the  human  race,  but  he,  nevertheless,  belongs  to  his 
own  nation  and  owes  it  allegiance,  even  to  the  extent  of  war  with 
his  other  and  remoter  relations.  In  this  relation  money  is  a 
domestic  concern,  and  has  rights  or  duties  which  we  are  bound  to 
respect. 

In  all  the  smaller  transactions  of  business  it  is  an  indispensable 
medium  of  exchange,  and  it  is  the  grand  security  for  the  current 
value  of  the  circulating  credit  money  which  promises  its  redemption 
in  coin.  Thus  gold  and  silver  perform  the  work  of  ordinary  retail 
traffic,  and  stand  security  for  some  hundreds  of  millions  employed 
in  the  larger  exchanges.  They  work  every  day,  every  hour,  every 
minute,  and  in  every  nook  and  corner  of  business  affairs. 

The  gold  and  silver  money  of  this  country  are  now  reported  by 
the  Director  of  the  Mint,  and  by  the  United  States'  Treasurer 
and  Comptroller  of  the  National  Banks,  at  the  sum  of  427  millions, 
and  the  circulating  notes  outstanding  at  668  millions.  France  has 
in  circulation  467  million  dollars  of  paper  money,  733  millions  of 
gold,  and  426  millions  in  silver  coins.  This  shows  the  importance 
of  care  in  the  management  of  the  basis  of  the  credit  medium  in 
both  countries;  and  exhibits,  besides,  the  reason  why  France  dare 
not  demonetize  her  silver  circulation,  and  cannot,  in  the  other 
alternative  of  mono-metal li-qn,  reduce  her  gold  to  a  market  com- 
modity. 


STANDARDS — GOLD    OR    SILVER,    OR    BOTH.  141 

I).  The  argument  from  such  facts  as  these  bears  upon  the  ques- 
tion of  gold  or  silver  as  the  legal  unit  of  value,  but  it  does  not 
show  any  ground  for  the  severance  of  the  domestic  from  the  wider 
policy  of  their  management. 

T.  These  facts  have  their  bearing  even  upon  the  subject  directly 
in  hand,  as  you  will  see.  The  difference  of  rule  and  regulation, 
to  which  you  advert,  lies  here.  It  is  in  the  vast  difference  between 
the  domestic  and  the  foreign  requirement  of  money  among  any 
particular  people.  Being  especially  concerned  with  the  question 
in  the  United  States,  it  is  to  be  noted  that  our  home  products 
which  go  into  market  and  the  services  paid  for,  have  fifteen  or 
twenty  times  the  gross  exchange  value  of  all  our  foreign  imports. 
The  number  of  exchanges  made  in  them  are,  perhaps,  a  hundred 
times  as  frequent,  requiring  the  metals  in  their  proper  traffic  office, 
as  well  as  in  the  support  and  utility  of  the  circulating  notes.  They 
are  in  incessant,  actual,  or  potential  use  against  intermitted  and 
infrequent  purchases  of  foreign  imports.  This  difference  allows 
me  to  suggest  an  analogy  between  the  heart-beats  in  our  bosoms 
and  the  hand  shaking  with  our  acquaintances. 

I).  You  sometimes  mix  poetry  with  your  logic,  and  patriotism 
with  principles  of  business  ;  so  that,  for  a  clearer  understanding 
of  the  subject  in  hand,  I  should  like  to  know  what  }7ou  would  have 
for  domestic  service  in  the  matter  of  money  ? 

T.  In  a  word,  I  would,  to  the  whole  extent  of  the  legitimate 
demands  of  domestic  commerce,  have  a  non-exportable  currency. 
I  would  have  an  American  money  so  decidedly  national  that  it 
would  not  pass  at  its  nominal  or  home  value  in  any  foreign 
market. 

D.  Is  it  possible  to  make  the  currency  required  for  domestic 
business  of  such  substances  or  qualities  as  shall  make  it  non-ex- 
portable, and  at  the  same  time  serve  all  the  uses  required  of  it  in 
domestic  eommerce  ? 

T.  Our  greenbacks,  fractional  currency,  and  national  bank 
notes  were  such  a  currency,  and  were  the  exclusive  medium  of 
home  commerce  during  the  great  Rebellion,  and  afterwards  up  to 
the  resumption  of  specie  payments,  at  the  end  of  the  year  1878, — 
a  period  of  seventeen  years  of  war  and  peace.  They  were,  as 
compared  with  gold,  greatly  depreciated.     They  were  only  prom- 


142  POLITICAL  ECONOMY. 

ises  to  pay,  and  they  rested  for  nearly  all  that  time  upon  the  un- 
certain solvency  of  the  government ;  and  were,  therefore,  not  at 
any  time  convertible  into  the  money  of  the  world  at  par.  But, 
by  the  accommodation  of  general  prices  to  their  estimated  valua- 
tion, they  did  manage  the  vast  business  of  the  necessary  exchanges 
of  the  period.  They  were  kept,  let  me  say,  preserved  by  their 
depreciation  from  foreign  interference,  and  the  disturbance  of  a 
foreign  standard.  In  that  same  quality  of  depreciation  below  the 
nominal  value  our  coins,  especially  the  lower  denominations  of 
them,  are  preserved  from  exportation. 

I).  Is  there  not  something  of  fraud  in  debasing  the  coin  of  the 
realm  by  the  authority  of  the  government,  as  well  as  by  the 
roguery  of  the  clipper,  sweater,  or  counterfeiter  ? 

T.  Are  you  not  aware  that  you  handle  some  of  those  debased 
coins  every  day  without  doing  wrong  to  anybody  ?  Congress,  by 
the  act  of  February  21,  1858,  for  the  purpose  of  retaining  our 
fractional  silver  coins  at  home,  reduced  their  intrinsic  value  nearly 
7  per  cent.  (6.909)  below  that  of  the  standard  or  unit;  so  that 
two  half  dollars,  four  quarters,  or  ten  dimes  have  a  weight  of  only 
384  grains  of  the  same  quality,  which  is  28|  grains  less  than  the 
dollar  piece  ?  Was  there  any  fraud  in  fixing  such  exaggerated 
nominal  value,  declaring  the  truth  of  the  depreciation,  and  warn- 
ing foreigners  and  all  concerned  of  the  difference  ?  Was  it  cheat- 
ing the  people  at  home,  or  was  it  securing  them  the  possession  of 
a  medium  of  payment  which  was  so  indispensable  that  in  the  early 
time  of  the  Rebellion  we  were  driven  to  the  use  of  postage  stamps 
to  supply  the  need  of  small  coins  which  their  premium  drove  out 
of  circulation  ? 

This  is  not  the  only  instance  in  which  lawful  coins  have  been 
reduced  to  prevent  their  banishment  from  the  marts  of  domestic 
trade.  In  the  year  1834  it  was  found  that  our  gold  money  was 
worth  abroad  6.262  per  cent,  more  than  the  silver  unit ;  and,  to 
prevent  its  exportation,  by  statute  of  28th  of  June  of  that  year, 
the  gold  eagle  was  reduced  from  270  to  258  grains,  standard,  and 
from  247£  to  232  grains  of  fine  gold.  Here  was  a  heavy  year's 
interest  struck  from  that  piece  of  the  world's  money  at  a  blow, 
and  this  was  done  to  make  it  something  nearer  to  non-exportable. 

P.  This  exposure  of  standard  moneys  and  of  legal  tender  looks 


STANDARDS — GOLD    OR    SILVER,    OR    BOTH.  143 

as  if  there  were  a  lurking  mischief  in  the  practice  of  minting  the 
precious  metals,  and  fixing  upon  them  an  arbitrary  price  or  value. 

T.  But  the  convenience  of  having  the  weight,  quality,  and 
exchange  value  of  coins  authoritatively  ascertained  outweighs  all 
possible  loss  in  their  domestic  use.  In  large  transactions  and  in 
foreign  trade  the  law  of  legal  tender  has  little  or  no  operation. 
This  fact  has  induced  the  assaying  and  forming  of  these  metals 
into  ingots  or  bars.  The  coins  of  all  countries  are  re-coined  be- 
fore they  enter  into  the  currency  of  any  other  country.  In  this 
the  essential  quality  of  all  money  is  regarded — its  convenience  in 
use — especially  in  the  smaller  pieces,  which  ordinary  people  are 
not  prepared  to  test  as  to  quality,  or  weigh  as  to  quantity. 

P.  But  there  may  be  fraud,  or  at  least  injury,  in  the  opera- 
tion of  legal  tender  laws  applied  to  the  larger  denominations  of 
money,  though  there  is  not  in  the  debasement  of  small  change, 
which,  after  all,  is  in  effect  only  a  provision  of  counters  for  the 
conduct  of  the  limited  business  it  is  required  to  serve. 

T.  A  brief  notice  of  the  changes  that  have  been  made  in  the 
values  of  coins  by  authority  will  suffice  on  this  point:  In  the 
year  10G6  the  tower  pound  of  silver  was  coined  into  20  shillings 
(equal  to  18|  shillings  of  the  troy  pound  adopted  in  1527),  and 
thereafter  the  same  quantity  of  the  metal,  or  troy  pound,  under- 
went the  following  startling  changes  :  In  1527,  forty  shillings  ; 
in  1553,  sixty  shillings  ;  in  1600,  sixty-two  shillings  ;  in  1816, 
sixty-six  shillings.  The  legal  tender  laws  of  England  fixed  and 
unfixed  these  variant  values  of  coins  bearing  the  same  name  in 
something  less  than  eight  centuries. 

In  France  the  livre,  or  pound  weight,  of  the  days  of  Charle- 
magne, about  A.  D.  800,  contained  fully  seventy-eight  times  the 
quantity  of  silver  that  makes  its  legal  tender  weight  now.  Turkey 
has  distanced  England  and  France  in  the  extent  of  her  changes. 
In  the  year  1753  the  piastre  was  worth  three  shillings  and  six- 
pence sterling  (about  85  cents  of  our  money).  In  1863  it  had 
fallen  to  a  fraction  over  two  pence  (4^  cents),  but  was  not  worth 
commercially  more  than  three  cents.  And  I  may  add  here  that 
the  United  States  pays  out  subsidiary  coins  at  a  profit  to  the 
government  of  12  per  cent,  over  the  price  of  the  silver  in  them. 

D.    This    history  vindicates   your    startling    proposition,    that 


144  POLITICAL  ECONOMY. 

money  is  not  a  standard  of  exchange  values  at  considerable  inter- 
vals of  time,  and  even  that  it  is  not  a  measure  of  intrinsic  equiva- 
lence at  any  time.  Indeed,  it  goes  far  to  show  that  for  the 
purposes  of  domestic  traffic  a  debased  or  depreciated,  or  even  a 
counterfeit,  currency,  while  undetected,  may  very  well  answer  the 
purposes  of  trade.  But  we  have  in  the  present  condition  of  civil- 
ized society  an  exchange  of  commodities  with  foreign  nations  for 
which  a  non-exportable  currency  is  unfit — a  kind  of  money  that 
bars  us  out  of  their  market  and  them  out  of  ours.  Must  we  have 
two  kinds  of  money  for  these  two  kinds  of  trade  ? 

T.  There  is  nothing  in  a  non-exportable  currency,  of  whatever 
materials  it  may  consist,  to  hinder  the  exportation  and  importation 
of  gold  and  silver  at  their  bullion  value.  They  are  not  now  sent 
to,  or  taken  in,  the  foreign  markets  as  money — they  are  valued 
by  the  metal  in  them.  England  pays  us  so  much  per  ounce  for 
our  gold  and  silver,  coined  or  uncoined,  alike  ;  not  so  much  for  our 
silver  dollars  or  gold  eagles.  If  you  could  get  rid  of  the  notion 
that  the  precious  metals  are  money  per  se,  you  would  understand 
that  we  could  trade  in  them  for  all  the  purposes  of  trade  as  we 
did  during  the  rebellion,  and  four  or  five  years  after  its  close, 
just  as  Ave  trade  in  broadcloth  or  bar  iron.  It  is  time  that  the 
agency  andiUses  of  these  metals  were  rightly  understood. 

D.  You  assume  that  we  shall  have  gold  and  silver  beyond  our 
home  requirement  for  exportation  when  the  balance  of  trade  in 
goods  and  other  products  is  against  us. 

T.  I  am  not  making  that  assumption,  any  more  than  I  am  ad- 
mitting that  when  the  balance  of  trade  is  in  our  favor  we  would 
have  no  use  for  the  precious  metals  in  which  it  would  be  paid.  I 
am  only  insisting  that  these  metals  are  not  money  in  international 
exchange,  any  more  than  they  were  at  the  mouth  of  the  pit  from 
which  they  were  dug.  As  products  of  industry,  let  them  go 
abroad  as  freely  as  we  export  the  surplus  of  our  wheat,  pork,  and 
cotton.  I  am  providing  for  the  medium  of  home  business  in  the 
form  of  money,  and  for  foreign  trade  in  the  form  of  merchandise. 

P.  The  provision  and  protection  of  the  home  supply  of  money 
is  so  important  with  you  that  you  would  have  it  control  our  for- 
eign trade.  But  we  have  frequently  been  in  debt  to  foreign 
traders.     What  is  to  be  done  then? 


STANDARDS— GOLD    OR    SILVER,    OR    BOTH.  145 

T.  I  cannot  alter  the  fundamental  principles  of  international 
trade.  It  is  by  natural  law  the  mutual  interchange  of  the  pro- 
ducts of  industry.  Primitively,  it  is  barter,  pure,  simple,  and 
direct,  and  so  far  exempt  from  the  accidents  of  indirect  agencies. 
Under  all  changes  of  operation  through  intervening  mediums,  it  is 
still  barter,  and  this  idea  should  control  foreign  trade  as  it  does 
domestic  commerce. 

P.  You  regard  money,  of  any  kind,  not  as  in  itself  a  value, 
not  as  a  substance,  but  as  an  instrument,  a  leverage  or  pulley- 
power  ;  not  the  thing  or  weight  to  be  moved,  but  as  a  machinery 
used  in  the  process  of  moving  other  things  ;  having  no  identity  of 
form  or  substance,  but  only  an  adaptation  to  the  service  in  which 
it  is  employed.  It  may  be  metal,  paper,  or  credit ;  fact  or  faith, 
ideal  or  material — any  conventional  medium  that  best  effects  ex- 
changes of  things. 

T.  To  familiarize  this  apprehension  we  need  only  advert  to  the 
various  substances  that  have  served  as  a  money  medium,  and  in 
the  circumstances,  one  as  well  as  another.  Shells  and  beads, 
wampum  and  cowries,  tobacco,  codfish,  cattle,  platinum — attempted 
in  Russia — gold  and  silver,  generally,  and  circulating  notes  almost 
as  general  in  modern  civilization,  or  during  almost  the  last  two  cen- 
turies. From  such  a  review  we  must  conclude  that  such  money 
or  moneys  as  these  are  not  in  themselves  equivalents  in  the  ex- 
changes of  property,  but  are  only  used  to  represent  or  express 
the  idea  of  value  in  the  things  exchanged. 

D.  I  understand  you  to  mean  that  the  necessary  quantity  of 
money,  in  any  and  every  form,  for  domestic  uses  should  be  made 
non-exportable,  to  preserve  it  for  service,  and  that  the  metals, 
called  the  precious,  will  pass  for  just  what  they  are  worth  by  esti- 
mation, like  other  products,  in  foreign  markets,  and  so  answer  all 
the  purposes  of  barter,  while  the  bank  note  representatives  or  sub- 
stitutes for  coin,  will  get  leave  to  stay  at  home,  because  they  are 
not  acceptable  abroad,  and  that  the  retained  gold  and  silver  will 
keep  them  solvent,  provided  we  take  care  in  our  international 
trade  to  make  our  exports  at  least  match  our  imports. 

T.  I  am  glad  to  find  the  disputant  growing  into  concordance. 
D.  There  is  still  one  point  upon  which  I  am  not  perfectly  clear. 
If  money  is  not  a  standard  of  value — if  the  metals  in  use  are  not 


146  TOLITICAL  ECONOMY. 

absolutely  independent  of  the  ideal  in  estimation, -why  should  they 
be  regarded  as  the  basis  and  gauge  of  credit  money  values,  and 
why  should  they  be  held  ready  for  the  conversion  of  circulating 
promises  to  pay  ?  Why  are  they  in  fact  and  in  law  actual  pay- 
ment ? 

T.  They  have  a  certain  intrinsic  worth  which  the  bank  note 
has  not;  that  worth  has  a  value  in  exchange  everywhere  which 
the  bank  note  has  not.  The  bank  note  says,  I  will  pay  on  demand ; 
the  coin  does  pay  without  a  contingency  that  must  be  risked. 
Specie  in  currency  is  like  security  behind  a  promise.  In  ordi- 
nary experience  it  answers  rather  as  a  test  of  solvency  than  as  an 
actual  redemption  of  a  pledge.  Representatives  of  unquestiona- 
ble value  are  so  much  an  idea  that  the  belief  of  convertibility, 
instead  of  actual  conversion,  is  all  that  is  required  in  a  credit  cir- 
culation. The  Frenchman  who  called  upon  his  New  York  banker 
in  a  time  of  money  trouble  expressed  the  philosophy  of  a  credit 
circulation.  "  If  you  can  pay  me  my  money,  I  don't  want  it;  if 
you  can't,  I  will  have  it."  That  tells  all  that  there  is  in  a  specie 
reserve. 

P.  A.n  argument  that  is  usually  called  exhaustive,  is  better  to 
be  closed  before  it  exhausts  the  parties  to  the  debate. 

T.  The  over-fulness  of  illustration  indulged  in  here  antici- 
pates, and  will  apply  itself  to,  our  coming  discussion  of  the  topic 
of  credit  money.  Keep  the  surplus  of  proof  on  hand  for  that 
purpose. 


CHAPTER  XV. 

MONEY,  A.   PRODUCER  OF  VALUES. 

T.  The  general  proposition — Labor  is  the  creator  of  all  values 
— needs,  for  more  abundant  caution,  to  be  guarded  against  such 
misconstruction  as  socialists  and  communists  are  prone  to  put  on 
it.  The  affirmation  must  be  understood  to  mean  that  labor  is  the 
primordial  agent  of  production,  just  as  native  ability  is  the  basis 
of  all  mental  attainment.  The  phrase  "knowledge  is  power"  is 
like  it,  meaning  that  power  is  the  out-come  of  knowledge,  and  not 


MONEY  A  PRODUCER  OF  VALUES.  147 

that  education  is  inoperative.  Levellers  use  such  phrases  when 
they  claim  for  the  seed  the  whole  product  of  its  growth  which  it 
gets  only  under  the  cooperative  influences  of  soil,  air,  rain,  and 
sunshine.  Man  stands  in  the  presence  of  external  nature  in  the 
attitude  of  a  combatant,  and  his  conquest  of  its  forces,  and  his  use 
of  its  contributions  to  his  service,  are  his  work  in  all  the  kinds  of 
force  which  he  exerts  upon  it.  Every  instrument  wThich  he  em- 
ploys in  the  achievement  is  included  in  the  great  compass  of  the 
term  Labor. 

Capital  in  all  its  forms  is  a  producer  of  values.  It  is  signifi- 
cantly called  "  dried  labor."  The  cause  is  in  the  effect.  If  a  man 
makes  a  spade  and  uses  it,  it  is  his  co-worker  and  coefficient  in 
further  production.  The  steam  force  and  the  wheels  and  pulleys 
of  a  machine  are  joint  contributors  with  natural  labor  in  produc- 
tion, and  are  entitled  to  shares  in  the  product  proportioned  to 
their  share  of  cost  in  the  work.  The  fact  of  ignoring  or  under- 
valuing the  claim  of  capital,  born  of  labor,  is  fatal  to  the  philoso- 
phizings  of  socialistic  theorists.  It  is  nothing  else  than  saying 
that  the  fruits  of  previous  labor  shall  not  be  owned  and  used  by 
those  who  created  them.  Such  capital,  whether  it  be  in  money, 
raw  material,  food,  or  clothing,  is,  in  its  way,  as  capable  of  new 
creations  as  is  the  laborer  himself. 

P.  In  common  language  capital  is  restricted,  in  meaning,  to 
money.  The  word  is  so  employed  in  speaking  of  banking,  manu- 
facturing, and  trading. 

T.  Money,  inactive  in  private  hands,  is  a  fund  or  hoard.  It 
takes  the  name  of  capital  when  it  is  at  work.  The  common  use 
of  this  distinctive  name  means  that  it  is  then  a  producer,  and  the 
moral  inference  is  that  "  the  laborer  is  worthy  of  his  hire." 

P.  Savages  remain  savages  because  they  do  not  accumulate 
capital  otherwise  than  beasts  and  bees  lay  up  stores  for  consump- 
tion in  the  season  of  need.  Their  reserved  acquisitions  are  in- 
tended only  to  meet  current  requirements.  Their  labor  products 
are  not  made  to  labor  for  them  in  further  production.  I  suppose 
I  may  say  that  capital  is  dead  to  them. 

T.  Hence  the  credit  in  estimation,  or  the  due  reward  in  work- 
ing, to  that  thing,  above  all  others,  which  is  the  life-spring  of 
human  progress. 


148  POLITICAL  ECONOMY. 

Indulge  me  in  some  reflection  upon  the  functions  of  productive 
industry,  in  which  capital  may  be  treated  as  the  coefficient  in  the 
multiplier  of  the  power  to  which  it  is  affixed.  Let  us  start  from 
the  point  that  the  conditions  of  human  life  are  such  that  its  indis- 
pensable supplies,  comforts,  and  luxuries  must  be  drawn  by  per- 
petual new  creations  from  the  elements  of  the  earth  and  of  the 
terrestrial  heavens.  Labor,  in  its  largest  sense,  embracing  that 
of  the  head,  heart,  and  hands,  is  the  cost  of  these  supplies. 
Among  civilized  men,  in  advancing  conditions,  these  necessities 
are  ever-increasing  in  extent  and  variety.  Human  progress  im- 
plies growing  control  over  material  things  ;  and  this,  again,  makes 
a  growing  demand  for  them.  Capital,  of  which  money  is  a  form, 
stimulates  and  promotes  the  production  that  must  meet  the  ever- 
enlarging  want.  Money  represents  the  sum  of  all  the  forces  in 
this  service.  It  is  active  as  an  agent,  as  well  as  a  sign,  a  counter, 
of  the  exchange  value  of  all  other  things, — such  as  labor,  raw 
materials,  machinery,  and  the  intelligent  directory  of  work  per- 
formed. Capital  in  the  form  of  money,  and  credit  acting  as  money, 
is  in  function  and  fact  the  primum  mobile,  the  chief  cause  of  mo- 
tion in  all  civilized  industries  ;  for  here,  as  in  the  Ptolemaic  system 
of  the  planetary  circulation,  it  is  the  outermost  revolving  sphere 
which  gives  motion  to  all  the  rest.  A  country  without  capital  has 
•foot-paths  for  its  highways  ;  with  capital  it  has  railroads.  Run- 
ners are  the  express  messengers  of  the  one  ;  the  electric  telegraph 
carries  the  messages  of  the  other.  These  conveniences  have  value 
because  they  are  uses.  The  sum  of  all  the  utilities  commanded 
measures  the  wealth  and  welfare  of  a  people.  The  labor  of  the 
past  is  not  dead,  it  is  alive  in  the  capital  of  to-day. 

P.  Then,  of  course,  if  money  is  labor  transformed,  it  is  some- 
times a  hireling,  as  in  the  low  estate  of  its  progenitor. 

T.  Well,  hireling,  if  you  please.  Do  you  know  any  office 
among  men,  whether  rewarded  with  salary,  fees,  or  wages,  that  is 
not  in  a  hireling  service  ?  Sometimes  money  works  for  its  owner 
for  wages  called  interest ;  sometimes  it  takes  the  role  of  an  em- 
ployer, when  its  yield  is  called  profit.  You  may  call  the  earnings 
of  money  invested,  interest,  rent,  or  wages.  In  the  olden  time  its 
return  to  the  lender  was  called  Usury,  derived,  I  suppose,  from 
it-  use  ;  but  the  words  fell  into  disuse  three  or  four  hundred  years 


MONEY    OF    ACCOUNT.  149 

ago,  under  the  prohibition  of  its  exaction  from  their  brethren 
among  the  Jews,  while  it  was  allowed  in  their  traffic  with  the  Gen- 
tiles. I  do  not  know  the  etymology  of  the  substituted  word,  In- 
terest. It  was  probably  adopted  as  a  technical  escape  from  the 
denunciations  of  the  law  and  the  prophets. 

P.  The  wages,  or  hire  of  service,  are  usually  described  by  dif- 
ferent terms — some  of  them  mere  euphuisms,  used  because  the 
rose  will  smell  sweeter  under  another  name. 

T.  They  are  distinctive  terms,  used  for  descriptions  of  the  same 
thins;  under  some  modification  of  circumstances.  Wages  is  em- 
ployed  to  express  the  award  of  common  labor;  salary,  for  service 
for  a  term  ;  fees,  for  official  or  professional  persons.  Honorarium 
was  used  for  the  compensation  of  physicians  and  lawyers,  when 
the  common  law  refused  its  remedies  for  the  recovery  by  suit  in 
the  courts  of  justice.  In  essence  these  are  all  alike.  They  are 
all  labor.  The  mind  labors  as  well  as  the  bod}T,  and  its  products 
are  called  the  works  of  the  author. 


CHATTER  XVI. 
MONEY  OF  ACCOUNT. 

T.  Our  inquiry  has  brought  us  now  to  .the  subject  of  credit- 
money  ;  but  we  cannot  enter  upon  it,  restricted,  as  it  usually  is, 
to  circulating  notes  or  paper  money,  without  a  closer  understand- 
ing of  the  general  subject  of  Money  of  Account.  Its  explication 
is  the  key  to  the  theory  of  money  of  every  kind  and  of  every 
substance. 

D.  As  a  description  of  a  kind  of  money  distinct  from  anything 
usually  known  by  the  name,  yet  treated  as  a  substantive  thing, 
and  requiring  distinctive  treatment,  it  may  be  some  sort  of  a  logical 
necessity  for  the  purpose  of  theoretical  debate. 

T.  Neither  the  phrase  nor  its  intention  is  the  invention  of  any 
sect  of  economists.  It  has  long  been  the  property  of  the  analysts 
of  the  money  function.     Montesquieu,  in  his  Spirit  of  Laws,  as 


150  POLITICAL  ECONOMY. 

long  ago  as  the  year  1748,  says:  "There  are  real  and  ideal 
moneys."  He  adduces  an  illustrative  instance  in  the  practice  of 
the  blacks  on  the  coast  of  Africa,  who  have  a  sign  of  value,  with- 
out money,  purely  ideal.  They  say  a  certain  article  is  worth 
three  macutes,  another  six,  another  ten  macutes.  That  is  the  same 
as  if  they  said  simply  3,  6, 10.  Thus  the  price  in  their  exchanges 
is  fixed  by  comparison  of  commodity  with  commodity,  for  there  is 
no  money,  and  they  have  no  reference  to  any  medium  of  standard 
value  existing  in  some  other  form  or  substance,  and  the  goods 
themselves  are  directly  compared  in  value. 

Bishop  Berkeley,  still  earlier  (1730),  in  the  form  of  a  query, 
which  conveys  an  affirmation,  puts  the  point  thus :  "  Whether 
gold,  silver,  and  paper  money,  are  not  tickets  or  counters  for  reck- 
oning ;  and,  whether  the  denominations  being  retained,  although 
the  bullion  were  gone,  things  might  not,  nevertheless,  be  rated, 
bought  and  sold,  industry  promoted,  and  a  circulation  of  commerce 
maintained?"  Here  is  a  distinction  between  money  in  substance 
and  money  of  account  fairly  presented. 

D.  These  authorities  are  speculative  philosophers.  Have  any 
practical  writers  thus  resolved  the  actual  into  the  ideal  ? 

T.  The  act  of  the  American  Congress  of  1792,  establishing  the 
national  mint,  has  this  recognition- of  the  insubstantial.  It  de- 
clares that  "  the  money  of  account  of  the  United  States  shall  be 
expressed  in  dollars  or  units,  dimes,  tenths,"  etc. 

Alexander  Hamilton,  in  an  elaborate  report  on  the  proposed 
system  of  coinage  made  to  Congress,  expressly  recognizes  the 
distinction  between  "  the  unit  of  the  money  of  account  "  and  "  the 
unit  of  the  coins."  Jefferson,  in  his  report  upon  the  same  sub- 
ject, assumes  the  same  distinction.  Stephen  Colwell  concludes  an 
exhaustive  examination  of  the  question  by  saying,  "  It  is  to  be 
noticed  that  we  are  not  bringing  forward  or  recommending  any 
new  mode  of  reckoning  or  computation.  We  simply  assert  the 
matter  of  fact  that  all  prices,  all  books  of  account,  all  statements 
of  sums  of  money,  all  bills  of  exchange,  and  promissory  notes, 
and  all  bank  notes,  are  expressed  in  money  of  account." 

The  Marquis  Gamier  well  and  truly  remarks,  "  We  distinguish 
two  kinds  of  money, — real  money,  or  coins,  and  money  of  account, 
which  is  the  expression  of  values,  or  the  specification  of  prices. 


MONEY    OF    ACCOUNT.  151 

The  valuation  of  merchandise  made  by  the  seller,  the  offer  made 
by  the  purchaser,  the  accounts,  the  promises  to  pay,  the  stipula- 
tions of  hiring,  quotations  of  stocks,  the  rents  of  farms, — all  that 
in  any  transaction  precedes  the  act  of  payment, — must  be  carried 
on  by  money  of  account.  Real  money  only  intervenes  for  actual 
payments." 

D.  Suppose  this  were  all  true  theoretically,  what  is  its  use 
practically  ? 

T.  I  will  not  allow  myself  to  argue  the  value  of  abstract  truth. 
I  content  myself  with  the  notion  that  it  is  well  to  understand  what 
we  and  our  neighbors  and  rulers  are  all  the  time  talking  about. 
Let  me  acid  to  the  authorities  already  cited  the  conclusion  arrived 
at  by  Kelly,  the  author  of  the  Universal  Cambist,  a  work  of  admit- 
ted authority,  founded  upon  information  obtained  with  great  labor 
and  expense,  in  which  the  author  was  aided  by  the  British  gov- 
ernment.    He  says  :    "  Moneys  of  account  may  be   considered 
with    respect   to    coins,  as   weights    and    measures   with   respect 
to  goods,  or,  as  a  mathematical  scale,   with   respect   to    maps, 
lines,  or  other  geometrical   figures.     Thus  they  serve  as  stand- 
ards of  the  value  of  both  merchandise  and  the  precious  metals 
themselves."    Mr.  Colwell  corrects  the  phrase  "  standard  of  value," 
justly  remarking  that  "  the  money  of  account  is  not  only  as  opera- 
tive, but  as  necessary,  to  commercial  dealing  when  the  coins  cor- 
respond with  it  as  when  they  do  not,"  which  is  fully  supported  by 
such  facts  as  these :     England  employed  the  pound  sterling  in 
computation  and  valuation  for  generations  before  the  year  181G, 
although   until  then  she  never  had  a  coin  corresponding    to   it. 
The  people  of  Pennsylvania,  Massachusetts,  and  Georgia  kept 
their  accounts  in  British  denominations  for  more  than  fifty  years 
after,  as  well  as  before,  the  Revolution,  though  the  unit  was  the 
dollar,  and  the  coins  were  in  decimal  fractions  and  in  multiples  of 
it,  and  although  they  had  not  a  single  coin  answering  to  the  de- 
nominations which  they  persisted  in  using  as  a  scale  of  values. 

This  is  what  is  meant  by  the  rule  of  valuation  as  an  ideal  or 
mental  proceeding.  This  is  what  Kelly  means  by  saying  that  the 
money  of  account  measures  the  precious  metals  themselves,  with 
the  necessary  consequence  that  these  metals  are  not  the  standard 
of  mental  valuation. 


152  POLITICAL  ECONOMY. 

P.  To  the  same  purpose  might  be  adduced  the  fact  that  the 
people  of  England  during  their  twenty-five  years  of  the  suspen- 
sion of  specie  payments,  ending  in  1822,  when  their  standard  gold 
ounce  troy  went  up  from  the  mint  price  seventy-seven  shillings  and 
ten  pence  ha'penny  to  eighty-eight  shillings,  a  rise  of  nearly  13  per- 
cent., must  have  been  estimating  their  coins  by  their  money  of 
account. 

T.  We  need  not  pursue  the  discussion  of  this  subject  further 
now.  In  the  treatment  of  credit  money  we  may  have  occasion  to 
supply  and  amend  deficiencies,  and  perhaps,  to  correct  remaining 
misapprehensions. 

P.  I  cannot  leave  the  discussion  of  the  money-value  question 
without  indulging  myself  in  a  laugh  at  my  own  innocency  of 
faith  when  I  was  an  unquestioning  believer  in  the  metallic  stand- 
ard doctrine.  This  is  the  way  it  took  me:  The  British  coinage 
act  of  1816  directed  that  the  sovereign  should  contain  exactly  113 
grains  and  xrVrrkhs  of  a  grain  of  pure  gold.  I  was  awfully 
impressed  by  the  precision  of  the  calculation,  and  naturally 
thought  that  it  must  be  that,  and  nothing  less  or  more,  and  that 
the  sovereign  must  have  and  hold  that  precise  exchange  value 
through  all  changes  of  time  and  revolutions  of  business  affairs. 
How  could  I  help  it?  What  was  all  this  ciphering  for,  if  it  did 
not  fix  a  certainty,  absolute  and  irreversible?  The  laugh  came  in 
when  I  heard  the  story  of  a  quack  doctor  who  ordered  Biddy  to 
"boil  a  bread-and-milk  poultice  exactly  two  minutes  and  a  half  by 
the  watch,  for  everything  depended  upon  the  exactitude  of  the 
concoction." 

"  Hivens,"  exclaimed  Biddy,  "  he  calkilates  like  an  angel." 

That  poultice  drew  on  my  money  standard  beautifully.  The 
precision  of  the  cooking  and  the  minting  explained  each  other. 


CREDIT    MONEY.  153 

CHAPTER  XVII. 

CREDIT  MONEY. 

T.  Coins  and  their  representatives  or  substitutes,  used  as  a  cir- 
culating medium  of  exchanges,  are  usually  described,  the  former 
as  metallic,  the  latter  as  paper  money.  You  will  have  observed 
that  I  am  conforming  to  this  usage  in  the  proposed  treatment  of 
the  function  of  the  circulating  note,  whether  issued  by  bankers  or 
by  government  officials. 

Promissory  notes  payable  to  bearer  on  demand,  issued  by  a 
government  or  by  corporations  authorized  by  it,  have  all  the 
essential  qualities  of  a  circulating  money.  The  principal  of  these 
qualities  is  their  convenience  as  exchangers  of  value.  Money 
being  only  a  medium,  it  is  a  thing  whose  use  does  not  terminate 
in  itself 'nor  bear  any  relation  to  itself.  Its  function  is  that  of  an 
instrument,  and  the  essential  quality  of  an  instrument  is  its  con- 
venience and  effectiveness  in  use.  Its  form  or  substance,  there- 
fore, ought  to  be  varied  with  its  varying  adaptedness.  If  money 
were  a  thing  to  be  consumed  in  use,  or  to  lose  its  form  and  prop- 
erties in  its  proper  service,  its  representative  character  would  be 
lost,  and  it  would  become  a  commodity  of  consumption ;  and  so 
take  the  position  in  exchanges  of  a  principal,  and  cease  to  be  a 
representative  of  value.  Its  intrinsic  qualities,  therefore,  are  not 
constituents  of  its  functionary  quality. 

P.  Our  dictionaries  render  "  money — anything  which  freely 
circulates  as  a  common  acceptable  medium  of  exchange."  It  has 
been  defined  by  its  derivation  from  the  Greek  7iomos,  law,  and  is 
by  the  same  etymology  called  nomisma.  Aristotle  is  quoted  for 
the  inference  that  it  has  its  value  from  law,  and  not  from  nature. 
You  have  adverted  to  the  saying  of  Adam  Smith,  who  regards  it 
as  dead  capital,  and  to  that  of  J.  S.  Mill,  who  excludes  it  in  his 
definition  of  capital.  Endless,  and  to  me,  confusing  definitions 
have  been  based  upon  the  word  and  upon  the  thing  itself.  I  am 
glad  to  get  a  firm  hold  of  it  under  the  apprehension  that  it  is 
essentially  only  a  medium  of  exchange. 

T.  A  medium  in  any  service  may  be  more  or  less  convenient. 
11 


151  POLITICAL   ECONOMY. 

There  is  indirectness  in  the  employment  of  any  intervening  agent. 
There  is  indirectness  in  ascending  to  a  story  ten  feet  high  by  a 
stairway  of  twenty  feet.  All  the  mechanical  powers  have  indi- 
rectness in  the  application  of  force;  they  are  mediums  of  various 
fitness  to  the  work  done  by  them  respectively,  and  their  several 
qualifications  for  service  are  in  their  conveniences. 

D.  Then  Smith  was  not  far  wrong  in  calling  money,  as  you 
would  call  a  lever,  a  dead  thing,  for  an  inflexible  rod  or  bar  is  as 
dead  as  a  doornail. 

T.  Smith  was  not  right.  That  is  not  dead  which  does  living 
things,  or  which  under  living  force  multiplies  living  results.  There 
is  something  vital  in  money-power.  If  you  want  100  bushels 
of  potatoes  ti'ansported  from  the  Pacific  shore  to  New  York,  sell 
them  there,  transmit  the  money  and  buy  as  good  ones  where  you 
want  them.  The  freight  of  the  medium  will  cost  you  a  penny  or 
two  ;  the  delay,  a  day  or  two,  or  a  minute  or  two  ;  and  lo  !  you 
have  your  potatoes  in  hand.  Now,  if  "  there  is  no  work  or  device 
in  the  grave,"  you  must  have  had  a  lively  servant  in  your  employ. 
You  caught  at  the  analogy  of  the  lever ;  money  has  the  lever- 
power,  but  it  is  not  an  inflexible  instrument  which  cannot  move 
without  a  solid  fulcrum  and  a  loss  of  time  proportioned  to  the 
weight  it  moves.  If  a  lever  is  an  instrument,  and  money  is,  also, 
an  instrument,  they  are  not  hung  on  the  same  hinges.  Think  of 
the  difference  in  their  respective  motor  powers. 

But,  to  the  quality  of  convenience  in  money  service — it  is  this 
that  determines  the  denominations  of  coined  pieces  of  the  precious 
metals,  and  the  name-value  of  their  paper  substitutes.  The  deci- 
mal fractions  of  the  silver  dollar  are  ultimately  more  convenient 
than  their  paper  representatives,  because  they  better  bear  the 
wear  and  tear  of  small  change  in  every-day  business.  The  Di- 
rector of  the  Mint,  a  year  or  two  ago,  stated  the  average  lifetime 
of  those  little  notes,  during  the  suspension  of  specie  payments,  at 
about  18  months  ;  and  the  cost  to  the  Government  of  keeping  45 
million  dollars'  worth  of  them  for  a  year  in  good  repair  was  about 
a  million  of  dollars.  In  this  respect  this  fractional  currency  was 
very  inconvenient,  that  is,  it  was  not  as  good  an  instrument  as 
small  silver  coins  are. 


CREDIT    MONEY.  155 

P.  Let  me  interrupt.  What  is  meant  by  the  Unit  of  value  as 
it  is  usually  employed  in  discourses  about  money  ? 

T.  It  is  a  necessity ;  and,  therefore,  a  device  of  notation,  or  of 
computing  and  expressing  quantity  in  aggregate.  The  word  or 
figure  1  embraces  all  the  fractional  parts  of  which  it  is  capable, 
and  all  increase  of  that  quantity  is  expressed  by  so  many  of  its 
units,  or  integral  groups,  or  individualities.  A  sum  of  money  is 
a  certain  number  of  its  known  denominations,  that  is,  of  its  units. 
With  us  we  count  by  the  dollar  unit  and  its  parts.  In  England 
the  pound  sterling  (worth  $4,866  of  our  money)  is  the  unit  em- 
ployed. In  France  it  is  the  franc  (about  19  cents).  In  Brazil  the 
real,  or  for  convenience  the  milreis  (1000  reis),  worth  about  54 
cents,  is  in  ordinary  use.  The  milreis  of  Portugal  is  worth  twice 
as  much  ($1.04). 

The  pound  sterling  is  awkwardly  large  for  the  expression  of 
small  sums,  for  which  reason  the  English  make  a  sort  of  unit  of 
the  shilling,  for  convenience;  as,  instead  of  two  pounds  and  a  half, 
you  will  hear  them  say  fifty  shillings.  The  French  franc  is  incon- 
veniently small  for  the  enumeration  of  large  amounts.  It  runs  up 
into  billions  in  the  national  debt.  In  our  annual  mint  reports  you 
will  find  a  table  of  the  various  values  of  the  units  in  use  in  all 
countries. 

P.  Geographical  miles,  I  suppose,  may  be  called  units  of 
measured  distance  ;  like  the  units  of  value,  they  differ  greatly  in 
different  countries.  It  is  curious  that  measures  of  length  should 
be  arbitrary  or  ideal,  or  mere  mental  processes,  just  as  measures  of 
value  are.  There  is  another  example  in  the  scales  of  thermometers, 
as  in  the  Fahrenheit,  the  Reaumur,  and  the  Centigrade.  They, 
also,  take  different  zeros,  and  they  are  at  par  with  each  other  at 
different  numbers  of  degrees  upon  their  respective  indicators.  The 
ideal  seems  to  rule  in  the  apprehension  of  the  most  absolutely  fixed 
and  determinate,  as  well  as  in  the  most  inconstant  quantities  and 
values.  It  results  that  the  mind  is  the  measure  of  matter,  and 
opinion  has  no  standard  fixed,  correspondent,  uniform,  and  uni- 
versal in  the  expression  of  quantities. 

T.  You  have  the  idea.  Nominal  values,  weights,  and  measures 
have  dominion  in  the  mind.  Indeed  all  forces  are  apprehended 
there,  whether  material  or  moral,  justifying  the  saying  of  the  poet,. 


156  POLITICAL    ECONOMY. 

"  The  ideal  is  the  real:"  and  the  practical  proverb, "  Things  are  just 
as  you  take  them."  So  let  us  take  care  how  we  disturb  the  tables 
of  weights  and  measures,  and  the  values  of  money  denominations, 
as  they  are  in  the-  common  understanding.  An  Englishman  counts 
simple  abstract  numbers  in  decimal  categories ;  he  counts  his 
fingers  and  toes  by  fives  and  tens.  He  has  that  idea  of  quantities 
in  his  head,  but  when  you  put  him  to  translating  his  twenty  shil- 
lings and  his  twelve  pence  into  dimes  and  multiples  of  them,  though 
they  be  in  his  familiar  decimals,  you  bother  him.  Even  in  the 
reports  of  the  London  money  market  you  will  find  our  dollar  of 
100  cents  stated  at  103,  to  avoid  the  trouble  of  computing  it  at 
its  exact  worth  in  shillings,  pence,  and.  fractions  of  a  penny.  In 
the  money  article  of  our  newspapers  }tou  find  this  difference  between 
the  London  and  New  York  reports  of  the  selling  price  of  United 
States  stocks. 

P.  Circulating  notes,  having  their  use  in  their  convenience,  their 
denominations  are  probably  under  the  same  rules  as  their  general 
use. 

T.  Yes  ;  this  is  one  of  the  conditions  to  be  observed  in  making 
a  medium  of  them,  as  a  register  or  notation  of  exchange  values  in 
the  transaction  of  business.  They  should  be  integrally  divisible, 
and  as  readily  aggregated  into  any  required  sums  or  quantities. 
One,  two,  and  five  dollar  notes  answer  the  purpose  perfectly.  Of 
these,  all  sums,  in  whole  number,  up  to  ten,  are  readily  aggre- 
gated ;  and  all  intermediate  denominations  are  unnecessary,  and, 
to  some  extent,  inconvenient.  Tens,  twenties,  and  fifties  are  less 
bulky  and  burdensome  for  all  the  larger  amounts  which  they  cover, 
and  are  exchangeable  into  the  lesser  denominations  when  required. 
The  still  larger  notes,  hundreds,  five  hundreds,  and  thousands  are 
less  necessary,  and  but  little  used.  They  carry  no  interest  as  the 
equivalent  sums  on  deposit  may  do  which  are  subject  to  draft,  and 
which  is  just  as  convenient  as  the  notes  are,  and  even  more  so. 
The  numbers  of  the  various  denominations  issued  by  the  National 
Banking  Office  indicate  the  relative  requirement  by  the  public. 
In  November,  1879,  the  number  of  five  dollar  notes  outstanding 
was  19,582,364;  of  tens,  10,973,624;  of  twenties,  3,032,608; 
of  fifties,  426,498  ;  of  one  hundreds,  269,116  ;  of  five  hundreds, 
1283;  of  thousands,  283.      The  ones  being  largely  supplanted, 


CREDIT    MONEY.  157 

or  supplemented,  by  the  silver  coins  then  in  use  were  only  3,567,- 
200  in  number;  and  the  twos  but  1,046,249,  because,  as  I  sup- 
pose, the  one  dollar  notes  usually  replace  them  in  use. 

P.  To  provide  the  money  of  the  realm  is  held  to  be  the  pre- 
rogative and  the  duty  of  the  sovereign  authority.  If  so,  the  gov- 
ernment should  take  care  to  make  the  supply  adequate  in  quality 
and  convenient  in  kind  for  all  the  purposes  of  business. 

T.  The  manifest  insufficiency  of  metallic  money  in  all  commer- 
cial communities  requires  the  deficiency  to  be  made  up  by  credit 
money,  of  which  the  circulating  note  is  an  important  portion.  It 
is  that  part  of  the  money  of  account  that  the  convenience  of  busi- 
ness, without  personal  credit,  requires.  Such  deficiency  of  circu- 
lating money  need  not  be  closely  calculated  ;  it  is  enough  to  show 
that  it  is  very  considerable.  The  Comptroller  of  the  National 
Bank  Currency  reports  an  aggregate  of  outstanding  notes  issued 
by  the  Treasury  (greenbacks),  and  by  the  national  banks  on 
the  1st  November,  1870,  at  $699,634,759  ;  but  this  sum  embraces 
$15,710,960  in  fractional  currency.  I  think  it  safe  to  subtract 
from  this  total  so  much  for  the  probable  loss  of  these  little  notes 
as  will  leave  it  at  694  millions. 

The  estimate  of  the  gold  and  silver  in  coins  and  in  bullion  in 
process  of  coinage  at  this  time  is  §481,700,000.  These  sums 
amount  to  say  1175  millions  in  round  numbers.  This  gives  us  the 
proportion  of  paper  circulation  as  59  to  41  of  coin,  or  nearly  as 
nine  dollars  of  paper  to  six  of  coin. 

But  there  is,  besides,  a  specific  kind  of  credit  money  in  circu- 
lation as  effective  as  that  in  the  form  of  circulating  notes.  This 
is  in  the  deposits  in  the  banks  and  other  money  institutions.  The 
Comptroller  of  the  National  Currency  states  it  thus  : — 

Deposits  in  the  national  banks,  .         .         .     $713,400,000 

"         in  State  banks  and  private  banks,      .       397,000,000 
"         in  savings  banks,         ....       783,200,000 


$1,893,600,000 
Now  add  the  note  circulation,  .         .         .       694,000,000 


$2,587,600,000 


This  gives  us  a  provided  circulation  of  notes  and  deposits,  con- 
vertible into  coin,  of  a  sum  no  less  than  2587  millions  against  the 


158  POLITICAL   ECONOMY. 

gold  and  silver  coins,  amounting  to  481  millions  (supposing  the 
two  kinds  to  be  proportionately  in  use  and  in  reserve).  The 
former.  84.32  per  cent,  of*  the  total,  and  the  latter,  15.(37  per 
cent. — -something  more  than  5 J  to  1. 

These  figures,  which  are  the  only  data  we  have,  manifest  the 
utter  inadequacy  of  the  specie  in  use  for  the  service  required  of 
circulating  money. 

P.  More  than  three  thousand  millions  of  effective  money  in 
circulation ! 

T.  The  census  of  1870  estimates  the  stock  of  marketable  values 
in  real  and  personal  estate  at  thirty  thousand  millions.  The  tenth 
part  of  this  property,  bought  and  sold,  would  swallow  up  the  three 
thousand  millions.  Beside  this  the  census  enumerations  of  other 
values, — the  products  of  the  current  industries,  with  wages  of  all 
establishments,  make  a  total  of  11,300  millions.  How  much 
more  will  you  allow  for  professional  and  official  fees,  for  travel- 
ling and  freight  expenditure,  for  rent,  for  boarding,  church,  and 
charitable  contributions,  and  for  festivities,  theatrical  and  musical 
expenditure, — all,  and -many  another  employment  and  enjoyment, 
requiring  current  money  ?  Shall  we  lump  the  account  current  at 
twenty,  thirty,  forty,  or  fifty  thousand  millions,  and  then  see  how 
our  three  thousand  millions  in  the  money  exchange  service  meets 
the  requirement ;  and,  more  especially,  how  the  sum  of  the  money 
meets,  measures,  and  controls  the  sum  of  the  prices,  according  to 
the  famous  equivalence  doctrine  ? 

D.  If  the  money  goes  into  the  service  six  or  eight  or  ten  times 
it  would  cover  the  demand  in  payments,  though  it  might  not  regu- 
late the  prices  current  by  the  proper  force  of  its  simple  quantity. 

T.  Are  not  all  commodities  and  services  paid  for  in  some  way 
just  as  often  as  the  contracts  of  exchange  are  made,  and  is  not  the 
sum  of  these  payments  exactly  equal  to  the  sum  of  the  prices  of 
the  things  sold?  The  same  coins,  and  coin-paying  notes,  are  put 
upon  duty,  if  you  please,  twelve  or  twenty  or  fifty  times  in  pay- 
ments, but  these  notes  and  coins  are  purchased  and  paid  for  every 
time  they  are  used.  Don't  forget  that  business  in  civilized  society 
is  not  direct  barter,  that  is,  money  is  not  present  in  a  hand-to-hand 
exchange  when  its  denominational  value  is  named.  Put  it  to  such 
service;  if  its  quantity  could  be  enhanced  to  the  vast  requirement, 


MONEY   OF   ACCOUNT.      •  159 

instead  of  being  a  facility  in  the  transfers  of  business,  it  would 
cost  in  time  and  toil  more  than  any  other  tax  imposed  upon  prop- 
erty. All  that  it  does  not,  and  in  the  nature  of  things  cannot  do, 
is  accomplished  without  its  intervention  by  that  other  agency 
which  we  have  called  money  of  account,  and  which  for  the  most 
part  is  settled  by  set-off',  in  which  nothing  is  used  but  the  name  of 
money  as  a  system  of  notation. 

P.  I  understand  you  to  mean  that  if  a  dollar  is  transferred  ten 
times,  its  purchasing  power  is  not  multiplied  ten  times  by  count- 
ing it  over  and  over  again,  as  against  the  principal  or  prime  value 
of  the  things  purchased  by  it,  because  they  are  multiplied  just  as 
often,  and,  therefore,  the  innate  power  of  three  thousand  millions  of 
it  cannot  be  made  to  meet  the  innate  cost-power  of  thirty  thousand 
millions  worth  of  commodities;  and  I  infer  that  it  is  a  medium 
only  in  the  exchanges  which  it  is  actually  used  to  effect,  and  that 
all  the  other  twenty-seven  thousand  millions  are  negotiated  with- 
out any  agency  of  the  money  represented  by  coins  and  circulat- 
ing notes.  The  drafts,  cheques,  and  book  accounts  which  do  this 
large  business,  are  a  sort  of  mediums  or  sub-mediums,  or  ancillia- 
ries  in  the  common  service,  and  are  equally  effective,  though  not 
warranted  by  any  public  or  corporate  guaranty.  Moreover,  I 
infer  that  the  true  idea  of  a  medium  is  not  in  its  substance,  but  in 
its  service. 

P.  Experts  have  estimated  the  amount  of  the  gold  and  silver 
coin  in  the  country  in  1860  at  200  millions.  In  the  20  years 
since  the  production  of  above  1270  millions  worth  of  these  metals 
from  our  American  mines  is  reported.  This  sounds  like  an  over- 
flow. What  has  become  of  it  ?  How  has  the  demand  met  the 
supply  ?  It  has  not  raised  prices — they  have  fallen ;  and  the 
paper  money  substitutes  have  risen  from  207  millions  in  1860,  to, 
you  say,  091  millions.  I  have  been  ciphering  till  I  am  tired  and 
out  of  patience  with  its  results. 

T.  So  far  as  your  data  go,  the  influx  is  easily  disposed  of. 
The  principal  or  fund  amounts  to  1470  millions.  Of  this,  910 
millions  excess  of  exportations  to  foreign  countries  over  imports 
from  them  leaves  but  560  millions.  Take  from  this  the  181  mil- 
lions on  hand  and  you  have  but  79  millions  for  consumption  in  the 
arts  and  manufactures, — not  quite  four  millions  averaged  per  year, 


160  ,     POLITICAL   ECONOMY. 

which  is  not  nearly  half  enough;  but  the  deficiency  may  he  sup- 
plied by  the  money  brought  in  by  immigrants  and  travellers, 
which  is  not  reported  at  the  custom-house.  None  of  these  items, 
official  or  estimated,  are  accurate  enough,  or  can  be  so,  to  render 
cipherings  about  them  into  certainties. 

P.  The  specie  circulation  is  certainly  more  abundant  than  at 
any  date  before  resumption. '  The  silver  dollars  are  complained  of 
in  the  banks  and  in  the  Treasury  as  a  burden;  it  is  spoken  of,  not 
in  thousands  or  millions,  but  in  tons,  and  you  cannot  get  green- 
backs or  national  bank  notes  in  large  quantities  for  gold  coins. 
Does  not  this  state  of  things  indicate  an  overplus  in  the  supply  of 
coins  ? 

T.  Not  of  itself.  The  notes  are  now  at  the  par  of  gold,  and 
the  convenience  of  the  paper  in  use  explains  its  preference. 

P.  I  thought  the  paper  dollar  only  served  to  make  up  for  the 
deficiency  of  the  metal  dollar  in  the  equalization  of  the  current 
exchanges  of  business;  but  it  seems  now,  that  it  supplants  the 
weightier  medium  in  use,  naturally  enough,  to  be  sure,  for  the 
bank  note  at  the  par  of  gold  is  in  fact  an  order  for  the  gold  where- 
ever  you  may  want  it ;  and  this,  I  suppose,  is  the  meaning  of  the 
gold  and  silver  certificates  of  deposit  given  in  the  Treasury  re- 
ports, and  I  observe  that  the  sum  in  silver  certificates  is  usually 
nearly  twice  as  great  as  of  those  of  gold — the  silver  is  so  much 
more  inconvenient  than  the  gold, — still,  the  supply  of  paper  money 
has  fallen  off  quite  90  millions  in  the  last  six  years.  What  does 
that  mean  ? 

T.  The  number  of  national  banks  is  now  above  2000,  and  there 
are  more  than  4000  State  banks,  private  bankers,  and  savings 
banks  besides.  All  these  money  institutions  are  clearing  houses 
for  their  respective  districts,  and  the  larger  ones  for  the  whole 
country  in  effect.  In  them,  and  on  their  books,  debts  and  credits 
are  set  off  against  each  other  without  the  intervention  of  either 
coins  or  notes,  and  thus  tend  constantly  more  and  more  to  displace 
the  common  medium  of  payment.  All  advancing  improvement  in 
the  order  of  business  is  marked  by  a  proportionately  diminished 
cash  circulation  in  the  transaction  of  equal  amounts  in  commercial 
exchanges. 

P.  Haunted  by  the  commonly-received  doctrine  of  "  supply  and 


CREDIT    MONEY.  161 

demand"  as  a  regulator  of  prices,  the  wonderful  yield  of  the  mines 
of  California  and  Australia  threatened,  upon  our  theory,  such  an 
overflow  of  the  precious  metals  upon  the  commodity  market  of  the 
world,  that  we  feared  the  precious  would  soon  sink  into  the  rank 
of  the  useful,  and  be  "  nothing  accounted  of  except  for  their 
qualities  of  texture  and  resistance  to  wear  and  tear  in  implements, 
utensils,  and  ornaments.  The  facts  developed  and  suggested  by 
such  inquiries  as  these  drive  one  upon  estimates  of  amounts  as  a 
way  of  getting  comparative  quantities.  The  present  yield  of  the 
mines  of  the  United  States,  Russia,  and  Australia  may  be  put  at 
180  millions.  The  director  of  the  mint  thinks  the  consumption  in 
Europe  and  America  in  the  arts  and  manufactures  is  from  45  to 
55  millions  of  gold,  and  from  25  to  35  millions  of  silver,  together 
TO  to  90  millions,  or  nearly  the  half  of  the  annual  product.  And 
there  are,  besides,  the  vast  populations  of  India  and  China,  which 
for  a  century  have  absorbed  from  20  to  40  millions  of  dollars  worth 
of  silver  per  annum.  I  suppose  that  the  expansion  of  commercial 
exchanges  which  the  influx  of  money  induces  will  provide  for  it. 

T.  Adam  Smith  observed  the  fact  that  the  importation  of  120 
to  140  millions  of  francs  per  annum  for  more  than  a  century, 
helped  by  a  vast  amount  of  paper  money  in  that  time,  had  not 
depreciated  the  exchange  value  of  the  precious  metals  in  Europe. 
On  the  contrary,  the  prices  of  commodities  had  fallen  very  con- 
siderably, as  measured  by  the  stock  of  the  medium  in  use. 

I  do  not  think  it  at  all  probable  that  any  yield  of  the  mines  yet 
to  be  opened  will  so  diminish  the  exchange  value  of  these  metals 
as  to  carry  their  ratio  below  the  decline  in  the  prices  of  products 
that  shall  in  future  be  confronted  with  them. 

Among  the  apparent  mysteries  of  metallic  money  is  this  one  : 
its  exchange  value  is  not  governed  by  its  quantity.  Its  scarcity 
and  its  abundance  are  not  subjectively  operative,  but  are  only 
relative  to  the  supply  of  its  substitutes,  or  the  means  of  payment 
that  may  be  made  to  replace  it.  The  fluctuations  in  its  currency 
effectiveness  depend  upon  the  credit-money,  or  upon  the  credit  of 
the  credit-money  in  the  business  market.  Lessen  the  stock  of 
coins  in  circulation  within  any  reasonable  or  probable  limits,  you 
only  call  into  use  so  much  more  credit-money,  which  in  all  its 
kinds  works  in  commerce  by  way  of  set-oif,  and  so  far  diminishes 


162  POLITICAL  ECONOMY. 

the  demand  for  coined  money.  Increase  the  stock  of  coin  as  much 
as  possible,  and  so  far  as  it  is  conveniently  available,  it  merely 
substitutes  cash  for  deferred  payments.  The  digging  for  the 
precious  ores  is  not  ever  among  the  positive  and  independent 
causes  of  expansions  and  contractions  of  market  values.  Its 
results  cannot  over-match  those  of  the  thousand  and  one  industries 
that  are  working  the  other  "way,  and  cheapening  the  things  for 
sale  faster  than  the  mines  can  cheapen  their  output.  The  standard, 
as  it  is  called,  does  not  more  affect  the  weight  which  it  is  supposed 
to  lift  than  the  weight  affects  it.  That  "  engineer  is  hoisted  by 
its  own  petard." 

D.  I  thought  you  would  make  the  money  of  the  country  non- 
exportable  ;  that  you  would  even  debase  the  metallic  required  for 
domestic  use  rather  than  risk  the  effect  of  its  certain  departure 
from  its  duty  as  a  medium  of  exchange.  If  so,  a  rise  or  fall  in 
the  tide  of  its  influx  cannot  be  insignificant. 

T.  The  paper  money  in  circulation  is  in  itself  non-exportable, 
and  the  coins,  if  need  be,  should  be  protected  from  the  melting- 
pot  and  from  exportation.  Bullion  is  a  commodity  of  commerce, 
and  all  the  precious  metals  in  that  form,  and  all  excess  of  coins  made 
from  them,  may  go  abroad  as  freely  as  cotton  or  corn.  But  I 
would  have  enough  money  active  at  home  to  support  its  industries 
and  enterprise  ;  and  I  would  have  that  money  stable  and  pliable 
to  the  exigencies  of  commerce.  I  would  protect  business  from  the 
ups  and  downs  of  a  fluctuating  fund  of  current  money,  that. 
among  other  good  results,  debts  may  be  paid  in  the  values  at 
which  they  were  contracted.  I  would  not  have  profits  and  losses 
on  a  perpetual  see-saw  of  chances.  I  prefer  the  regular  rule  of 
law  to  the  happening  of  a  lottery  in  the  issues  on  which  men  de- 
pend for  their  welfare.  It  is  one  of  the  chiefest  of  the  equities 
which  civil  government  is  bound  to  secure  to  its  subjects,  to  main- 
tain the  validity  of  contracts.  And  this  can  be  done  only  by 
maintaining  the  nominal  at  the  exchange  value  of  the  money  of 
the  people. 

If  money  shall  become  cheaper  in  exchange  for  labor,  as  it 
must  when  the  world  grows  more  wealthy,  the  change  or  the 
depreciation  is  just  what  happens  to  all  other  property  ;  and  gov- 
ernment  is    not  under   any   exceptional   obligation   to  keep   old 


BANKING.  163 

debts  unimpaired  amid  the  decline  of  all  other  things  of  value. 
The  fixed  property  in  land  and  labor-power  must,  and  should,  by 
the  expense  of  their  improvements,  and  through  those  improve- 
ments made  more  and  more  effective  in  service,  rise  relatively  to 
the  prices  of  the  things  which  they  produce  ;  among  which  are 
money  and  money  claims.  But  such  change  is  gradual,  and  does 
not  affect  the  current  credit  values  in  which  ordinary  business  is 
conducted.  "  The  mills  of  the  gods  grind  slow,"  and  the  world 
has  time  to  be  ready  for  the  grist.  Let  there  be  steadiness  in 
change,  growth  without  shock,  in  the  provident  arrangements  of 
societary  life. 


CHAPTER  XVIII. 
BANKING. 

T.  Of  course  we  do  not  intend  in  our  discussion  of  this  subject 
to  treat  it  as  if  we  were  producing  a  system  such  as  might  be  a 
directory  for  the  conduct  of  bank  officers.  We  are  neither  re- 
quired, nor  are  we  competent,  to  perform  such  a  task. 

Money  banks  are  of  several  kinds.  Observe,  however,  that  we 
do  not  give  the  name  of  bankers  to  the  mere  custodians  of  cash, 
who  keep  and  return  the  identical  sum  or  substance  in  bulk  with- 
out use.  This  is  only  another  way  of  hoarding,  and  has  nothing 
of  the  function  of  banking  in  it.  The  institutions  that  fall  pro- 
perly within  the  name  may  be  classed  as  of  two  kinds  only, 
though  neither  of  these  has  an  invariable  character.  They  are 
sufficiently  distinguished  for  consideration  as  Banks  of  discount 
and  deposit,  and  Banks  of  issue. 

One  of  the  earliest  banks  of  deposit  (which  must  also  have 
loaned  its  funds  at  a  discount  for  the  use)  of  easy  reference  is 
that  mentioned  in  the  gospel  of  Luke  (chap.  xix.  23),  in  which 
money  was  deposited  so  that  the  owner,  after  an  interval,  could 
receive  it  again  with  usury.  Such  banks,  doubtless,  existed  long- 
before  the  Christian  era,  for  the  very  earliest  organization  of 
commerce  required  a  money-exchange  corresponding  to  the  co- 


104  POLITICAL   ECONOMY. 

existing  commodity-exchange.  Such  banks  held  the  money  left 
with  them,  and  of  course  issued  some  sort  of  certificates  of  the 
deposit,  and  these  evidences  may  have  been  made  negotiable,  or 
even  payable  to  the  bearer. 

P.  Some  of  our  banks  do  not  pay  interest  on  deposits.  I 
believe  very  few  do. 

T.  The  deposits  in  our  banks  are  largely  credits  to  their  custom- 
ers, and  of  course  do  not  carry  interest  in  their  favor.  Deposits 
of  actual  money  are  received  to  be  returned  on  demand,  and  the 
banks  pay  themselves  for  their  trouble  and  risk  out  of  the  interest 
which  they  derive  from  the  use  of  such  money  in  their  ordinary 
business.  I  do  not  know  any  bank  whose  sole  agency  is  in  the 
holding  and  returning  the  money  intrusted  to  it,  upon  any  other 
compensation  than  its  profit  in  the  use  of  the  fund.  Banks  of 
deposit  are,  therefore,  better  described  as  banks  of  discount  and 
deposit. 

P.  You  seem  to  regard  these  banks  as  indispensable. 

T.  They  are  certainly  inevitable.  Society  has  never  been 
without  them  in  historic  times.  The  business  of  collecting  and 
distributing  the  spare  money  of  people  who  had  it  in  use  as  a 
medium  of  commercial  exchange  has  always  existed. 

I).  The  depositary  does  not  increase  the  stock  of  money  by 
merely  handling  it.  The  banker's  chest  is  not  a  nest  in  which  it 
breeds  or  increases  any  more  than  it  does  in  the  pocket  or  safe  of 
the  owner.  In  union  there  is  strength,  but  can  this  be  said  of  the 
gatherings  of  "money  in  hands  that  do  not  own  it- or  employ  it  in 
further  production  ? 

T.  There  is  a  maxim  of  the  common  law,  usually  expressed  in 
Latin,  but  which  I  suppose  might  also  be  found  in  the  Sanscrit  or 
even  in  the  Mohawk  tongue,  "  that  which  one  does  by  another  he 
does  by  himself."  The  banker  is  a  collector  and  distributor,  as  the 
clouds,  the  rills,  and  the  rivers  are.  The  rills  that  a  dead  leaf 
might  obstruct  make  the  rivers,  and  the  rivers  repair  the  waste  of 
the  ocean.  The  currency  that  floats  the  commerce  of  continents, 
struck  stagnant,  would  evaporate  into  thin  air.  It  is  the  accumu- 
lation that  gives  it  serviceableness.  The  deposit  banker  is  the 
little  river  that  gathers  the  rills  into  a  tide  of  effective   force,  and 


BANKING.  165 

he  disperses  them  again  in  currents  that  irrigate  the  sources  from 
which  they  came. 

D.  Similies  used  in  didactics,  though  something  like,  are  not 
as  clear,  nor  always  as  safe,  as  object  teaching.  They  task  the 
learner  to  find  the  correspondences,  and  he  may  miss  them. 

T.  Allow  the  assumption  that  hydrodynamics  would  help,  not 
embarrass,  the  apprehension  of  a  currency  of  another  kind.  It 
suggests  the  tributary  supplies  of  the  many  rills,  their  accumula- 
tion of  force,  the  effect  of  their  distribution,  and  allows  also  for 
the  obstacles,  drains,  riffles,  falls,  and  overflows,  and  so  is  illustra- 
tive of  their  counterparts  in  the  conditions  and  accidents  of  the 
money  circulation.  It  will,  however,  promote  our  aim  to  trace  the 
commerce  in  money  in  narrative  plainness. 

P.  Yes  ;  it  seems  to  me  that  elementary  instruction  is  often  cut 
in  chunks  too  fat  for  easy  digestion.  Nothing  is  lost  by  well 
adapted  amplification.  The  time  and  trouble  of  the  outfit  saves 
as  much  and  more  on  the  journey.  Too  much  compactness  gives 
only  the  more  trouble  in  the  unwinding. 

T.  Well,  then,  to  begin  at  the  very  base  of  the  edifice  : — Im- 
agine a  condition  of  society  in  which  coins  of  the  precious  metals 
are  employed  just  as  other  commodities  are  in  simple  barter ;  the 
coins,  or  their  material,  present  and  passing  from  hand  to  hand 
in  every  payment  made.  Here  we  have  no  banker  or  banking 
function  interposed.  Every  man  keeps  his  cash  in  his  own  cus- 
tody. There  is  no  credit  nor  confidence,  and  there  are  none  of 
the  risks,  as  there  are  none  of  the  conveniences  of  a  credit  system. 
In  this  state  of  things  it  is  obvious  that  money  must  lie  idle  in  the 
hands  of  the  owners  during  the  intervals  between  sales  and  pur- 
chases— in  a  state  of  suspended  animation,  useless  to  the  possessor 
and  to  the  community — a  fruit  of  labor  not  fructifying;  in  garner 
and  not  growing ;  the  mummied  remains  of  a  vital  organism. 

Now,  suppose  that  the  owner  of  the  fund  desires  to  improve  it ; 
to  have  it  active  in  his  own  service  and  in  the  service  of  the  com- 
munity which  requires  its  instrumentality  in  productive  industry. 
(I  wish  I  could  make  the  word  productive  mean  something  of 
growth,  increase,  new  creation.)  Its  employment  for  use  is  in  its 
conversion  into  other  property  yielding  profits  to  himself  and  to 
others,  who  will  hire  it  for  its  active  power.     He  can  so  use  it 


166  POLITICAL   ECONOMY. 

himself  only  to  a  very  limited  extent.  He  is  not  skilled  in  every 
kind  of  production  of  which  his  money  is  capable.  The  amount 
in  his  hands  is  too  small  to  be  available.  It  is  useless.  He  can 
make  nothing  of  it.  But  there  is  a  depository  at  hand  that  can 
make  forces  out  of  fragments.  The  banker  gathers  it  as  the 
harvester  gathers  the  multitude  of  grain  stocks  into  bundles,  or 
he  gathers  the  little  rills  into  currents  capable  of  moving  the  wheels 
of  business.  The  wonderful  result  is  indicated  by  the  report  of 
the  Comptroller  of  the  Currency.  On  an  acknowledged  deficiency 
of  returns  he  reports  in  the  year  1879  an  accumulation  of  deposits 
of  above  1100  millions  in  the  State  banks,  private  banks,  and 
savings  banks  of  the  United  States.  (The  deposits  of  the  National 
banks  are  not  included  in  this  sum,  because  they  may  be  supposed 
to  consist  more  largely  of  credits.)  It  is  safe  and  much  within 
bounds,  to  say  that  a  thousand  millions  of  dollars  are  thus  gathered 
from  dribblets  of  deposits,  and  made  active  in  the  general  service 
through  the  agency  of  bankers,  which  would  otherwise  be  useless 
and  profitless  in  private  hands. 

The  reported  capital  employed  in  all  our  manufactories  is  just 
about  twice  this  amount.  Thus,  half  of  all  our  industrial  estab- 
lishments draw  their  resources  from  this  source,  and  one-fourth  of 
all  their  products  are  due  to  it.  This  proximately  measures  the 
cumulated  force  of  the  thousand  contributory  rills  of  idle  cash  to 
the  motor  power  of  industry  and  commerce. 

P.  What  position  do  our  savings  banks  hold  in  the  common 
money  service  ? 

T.  Some  of  them  take  deposits  on  time  stipulated,  and  lend 
money  on  landed  securities,  which  is  not  banking  in  its  present 
usage.  Some  deal  in  accommodation  paper,  as  do  also  some  banks 
of  issue  ;  but  this  is  bad  banking  generally.  It  is  not  a  discount- 
ing of  paper  coming  due  which  will  be  met  with  products  in  the 
market.  It  may,  indeed,  represent  available  values,  but  it  may, 
also,  be  a  provision  for  old  debts,  and,  so,  not  an  accruing  source 
of  payment.  Accommodation  paper  does  not  represent  the  antici- 
pation of  products,  but  a  balance  due  on  past  transactions,  whose 
security  is  in  the  present  solvency  of  the  borrower.  He  may  be 
able  to  meet  the  engagement,  but  it  must  be  from  past  earnings 
which  he  expects  to  realize,  but  are  not  presently  available.     The 


BANKING.  167 

eminent  function  of  banking  is  the  anticipation  of  payments,  not 
adjustment  of  subsisting  and  outstanding  or  over-due  debts.  Busi- 
ness exchanges  are  movements  in  what  people  are  doing,  not  in 
what  they  have  done.  The  business  medium  is  not  a  matter  of 
epitaphs,  but  of  life  histories  and  affairs.  Banks  which  lend  money 
on  landed  securities  cannot  have  the  fund  so  invested  to  meet  their 
own  debts  and  demands.  So  far  they  are  mere  money  lenders, 
and  not  banks,  in  the  current  meaning  of  that  function. 

P.  The  banks  of  your  first-named  class — banks  of  discount  and 
deposit — by  issuing  certificates  of  deposit,  and  by  paying  checks 
and  drafts,  give  circulation  to  the  money  of  account. 

T.  That  was  an  early  form  of  the  money  agency,  out  of  which 
the  greater  convenience  of  the  circulating  note  has  grown.  The 
common  text-books  and  general  histories,  noticing  the  fact  that 
two  or  three  centuries  ago  the  institutions  which  we  now  call 
banks  did  not  exist,  inform  us  that  so  lately  as  the  time  of  the 
restoration  of  the  Stuart  dynasty  (A.  D.  1661)  the  goldsmiths 
of  London  kept  the  cash  of  the  commercial  houses,  paid  their 
drafts,  and  loaned  balances  in  their  hands,  paying  themselves  for 
trouble  and  risk  out  of  the  interest  of  such  surplus  of  deposits  as 
experience  showed  could  be  loaned  consistently  with  the  solvency 
of  the  bankers. 

P.  I  observe,  in  the  Comptroller's  report  of  December,  1879, 
a  summary  of  the  corporations  and  private  bankers,  who  are 
money  dealers  in  various  ways,  which,  I  suppose,  are  all  engaged 
in  collecting  and  distributing  the  spare  money  of  the  people, — all 
borrowers  and  lenders,  depositaries  and  discounters,  active  in  keep- 
ing it  in  circulation  and  in  use.  In  this  statement  there  are,  out- 
side of  the  national  banks,  1005  State  banks  and  trust  companies; 
2634  private  bankers  ;  29  savings  banks  with  capital,  and  644 
savings  banks  without  capital, — altogether  holding  an  aggregate 
of  deposits  amounting  to  1180  millions.  If  we  add  to  this  sum' 
the  deposits  in  the  national  banks,  we  have  a  grand  total  of  1893 
millions. 

T.  Let  me  explain,  to  the  purpose  of  the  point  now  under  con- 
sideration. The  Comptroller  of  the  Currency,  under  an  act  of 
Congress,  is  required  to  collect  and  publish  the  statistics  of  the 
money  institutions  of  the  country  which  are  not  under  his  control, 


168  POLITICAL    ECONOMY. 

and  whose  condition  he  is  obliged  to  gather  from  any  and  all 
available  sources.  He  has  several  times  complained  of  -a  very 
considerable  deficiency  in  the  data  so  obtained.  Many  of  the 
States,  especially  those  of  the  Northwest  and  South,  do  not  re- 
quire reports  from  their  money  dealers;  and  the  Comptroller  of 
the  National  Currency,  after  several  years  of  unsuccessful  en- 
deavor, has  adopted  the  register  of  the  internal  revenue  depart- 
ment of  the  general  government  as  the  most  reliable,  so  far  as  it 
goes.  This  is  official,  and  certainly  not  exaggerated,  because  the 
amounts  are  taken  as  a  basis  of  assessment  for  taxation.  If,  in 
England,  a  full  fourth  of  the  subjects  of  excise  contrive  to  evade 
reports,  how  much  more  so  in  our  widely  extended  dominion, 
where  internal  taxes  are  not  only  unusual  and  unpopular,  but  are 
as  often  as  possible  resisted  and  evaded. 

Moreover,  vast  sums  passing  through  the  hands  of  depositaries, 
are  entirely  out  of  the  .reach  of  government  officers.  There  are 
uncounted  millions  collected  in  trivial  sums,  and  invested  by  the 
custodians  of  secret,  charitable,  and  religious  societies.  As  a  hint 
of  the  purely  secular  and  business  associations,  take  the  building 
associations  of  a  single  city — Philadelphia.  At  a  meeting  of  the 
Social  Science  Society  in  May,  1876,  it  was  stated  that  there  were 
then  in  active  operation  in  Philadelphia  450  of  these  associations; 
their  loans  on  mortgage  security  amounted  to  72f  millions  ;  and 
their  receipts,  during  1875,  rose  to  more  than  seven  and  a  half 
millions. 

You  will  observe  that,  in  summing  up  the  deposits  reported  by 
the  Comptroller,  I  used  his  official  figures,  allowing  an  abatement 
for  that  part  of  them  that  may  be  mere  credits  on  the  books  of  the 
bankers  ;  and,  so,  not  representative  of  their  collections  of  spare 
or  idle  cash  from  the  people.  I  now  suggest  that  the  uncounted 
and  unreported  may  be  safely  taken  to  replace  and  even  over- 
balance all  these  deductions.  I  believe  that  the  grand  aggregate 
of  these  collections  and  loans  hovers  about  a  total  of  two  thousand 
millions.  Now,  mark,  the  reported  capital  of  all  the  manufactures 
returned  by  the  census  officers  in  1870  was  2118  millions,  and  the 
value  of  the  products  twice  as  much — 4232£  millions.  May  we 
not  conclude  that  the  money,  which  would  be  otherwise  idle  by  the 


BANKING.  169 

intervention  of  bankers,  is  made  active  in  moving  nearly  all  the 
enterprises  of  our  productive  industries  ? 

P.  Do  I  understand  you  to  mean  that  the  employment  of  money, 
immediately  or  directly  by  its  owners,  in  the  production  of  com- 
modities, is  an  inconsiderable  and  almost  an  insignificant  part  of 
its  work  in  the  hands  of  those  who  hire  its  use  ? 

T.   I  think  so. 

P.  Then  it  seems  that  money,  which  Adam  Smith,  following 
David  Hume,  calls  ."  dead  capital,  and  but  a  small  part  of  the 
capital  of  a  country,  and  always  the  most  unprofitable  part  of  it," 
turns  out  to  be  a  very  lively  thing  in  use,  and  a  productive  agency 
of  very  great  potency.  What  could  have  induced  J.  S.  Mill  to 
say  that  "  money,  as  money,  satisfies  no  want,  answers  no  pur- 
pose ?  " 

T.  No  amount  of  intelligence,  or  of  critical  acumen,  prevents 
a  hackney  logician  from  taking  the  bit  in  his  teeth  and  running 
away  with  the  driver.  Mill's  definition  of  political  economy  is 
the  point  at  which  his  pony  started.  Recollect  that  he  says  "  Ik 
is  an  abstract  science  ;  "  and  that  "  it  reasons,  and  must  neces- 
sarily reason  upon  assumptions,  not  from  fact."  That  conception 
put  him  above  facts,  out  of  the  way  of  facts,  and  opposed  to  facts. 
He  does  not  allow  money  any  place  in  his  definition  of  capital. 
He  does  not  treat  it  as  an  instrument  by  which  men  acquire  and 
exert  power  over  the  forces  of  nature  ;  yet  he  accords  such  agency 
to  the  labor,  food,  and  clothing,  which  money  supplies,  in  all  the 
processes  of  industrial  production  ! 

P.  Is  there  an  exact  and  instructive  analogy  in  the  circulation 
of  the  blood  in  the  animal  frame  to  the  circulation  of  money  in  the 
body  of  the  community  ? 

T.  The  idea  of  the  money  circulation,  with  its  allusions  to  the 
movement  of  blood  in  vital  organisms,  has  certain  striking  corre- 
spondences. Blood  is  circulated  as  the  conveyer  of  nutriment  or 
material  for  the  manufactories  of  the  living  system  ;  it  is,  besides, 
a  stimulant  of  the  vital  functions.  In  these  offices  the  analogy 
authorizes  the  interchangeable  use  of  the  word.  There  is  in  both 
the  like  required  constancy  and  sufficiency  of  supply.  But  there 
are  differences  between  these  two  circulations  which  must  be  no- 
ticed, as  well  and  as  carefully  as  the  real  correspondences.    From 

(UHIYBRSITH 


170  POLITICAL  ECONOMY. 

greatly  increased  force  of  propulsion  and  inordinate  rapidity  of 
the  blood  circulation  mischiefs  result,  for  which  there  is  no  proper 
parallel  in  the  money  movement  through  the  channels  of  business. 
Momentum,  or  the  weight  multiplied  by  the  velocity  of  the  vascu- 
lar circulation,  besides  quantity  in  relation  to  time, — so  many  pul- 
sations to  the  minute — means  force  of  impingement  and  pressure 
upon  the  vital  organs.  There  are  no  such  effects  attending  an 
accelerated  movement  of  money — nothing  corresponding  to  ple- 
thora or  oppressive  engorgement.  It  does  not  gorge  its  recep- 
tacles ;  nor,  as  a  result,  does  it  morbidly  exaggerate  or  repress 
the  agencies  to  which  it  ministers. 

D.  You  surprise  me.  Have  I  not  heard  of  an  inflated  cur- 
rency, inducing  speculative  prices?  But,  your  doctrine  does  not 
admit  of  an  over-supply  of  money.  What  then  is  the  meaning  of 
sudden  expansions  and  contractions  of  the  circulation,  and,  the 
business  revulsions  attending  them  ? 

T.  The  panics  and  pressures  of  the  markets  have  not  been  oc- 
casioned by,  or  attendant  upon,  the  conditions  of  the  thing  which 
you  and  I  are  thinking  of,  when  we  are  considering  money  in  its 
normal  functions.  The  money  system  can  take  care  of  itself,  un- 
der legitimate  administration  ;  which  we  will  show  when  we  come 
to  the  subject  of  banks  of  issue.  The  outbreak  of  the  disturb- 
ances which  you  speak  of,  usually  takes  its  earliest  form  in  a 
panic  ;  that  is,  an  opinion,  which  works  itself  into  a  pressure,  the 
pressure  being  a  rebound  of  opinion.  This  can  happen  disas- 
trously in  any  mode  or  condition  of  the  credit  system.  "When 
faith  fails,  dependent  facts  follow  as  a  consequence.  When  I 
speak  of  the  money  circulation  and  its  laws,  I  am  talking  about 
a  veritable  money,  as  when  I  speak  of  the  blood  circulation,  I  do 
not  mean  the  arteries  and  veins  crowded  with  whisky,  or  over- 
loaded with  water,  or  any  other  abnormal  mixture.  An  inflated 
currency  is  a  circulation  filled  with  air  bubbles,  which  will  not  bear 
the  pressure  of  its  channels.  It  is  not  a  healthy  medium,  but  a 
currency  in  fits,  marked  by  froth  and  jerks,  speculatively  inflicted; 
an  airy  nothing,  which  has  not  its  cause  in  substantive  things,  but 
in  notions  of  such  things. 

I).  Bankruptcy  and  ruined  fortunes  that  were  sound  yesterday 


BANKING.  171 

and  beggared  to-day  are  very  real  things,  and  have  their  causes 
in  the  conditions  of  things  in  which  they  arise. 

T.  Morbid  visions  and  insanities  are  as  real  things,  and  arise 
out  of  the  conditions  of  things.  When  a  man  finds  himself  turned 
into  a  tea-pot,  or  feels  a  shoemaker  at  work  in  his  stomach,  he  has 
probably  mistaken  the  occasional  cause  of  his  distress.  It  is  not 
his  natural  diet,  but  the  flatulence  of  indigestion  that  produces  the 
results  complained  of.  You  are  not  afraid  of  ordinary  changes  in 
the  supply  of  metallic  money.  Nobody  ever  thought  of  attributing 
sudden  business  inflations  and  contractions  to  that  cause  ;  and 
credit  money  limited  to  and  coextensive  in  quantity  with  actual 
exchanges,  to  which  it  is  very  capable  of  accommodation,  is  as 
well  based  upon  real  values  as  coin  can  be.  It  is,  in  fact,  and  in 
its  nature,  a  better  measure  of  exchange  values  than  the  arbitrary 
prices  of  coins  are.  The  former  is  the  express  image  of  the 
things  which  it  represents,  while  coins  carry  with  them  nothing 
so  exactly  as  the  symbols  of  sovereignty — the  head  of  Victoria  or 
the  American  eagle  stamped  upon  them  with  a  die. 

BANKS  OF  ISSUE. 

T.  We  have  already  noticed  the  rudimentary  form  of  the 
banking  system  as  it  is  authoritatively  given  in  the  Gospel  of 
Luke  (xix.  23.)  Another  allusion  to  it  is  found  in  Matthew  (xxi. 
12),  where  the  "money  changers"  are  found  exercising  their  trade 
in  the  temple  at  Jerusalem.  In  the  former  instance  the  business 
is  styled  banking,  and  the  description  is  of  a  bank  of  deposit  pay- 
ing interest,  and,  of  course,  lending  the  deposits  at  a  higher  rate, 
as  is  the  usage  of  the  simplest  form  of  savings  banks  in  our  own 
time.  The  money  changers  of  the  temple  seem  to  answer  to  our 
brokers.  From  the  necessity  of  such  functionaries,  wherever 
money  has  been  in  use,  we  infer  their  existence  coeval  with  the 
exchanges  of  business  traffic  in  times  long  before  the  dates  we  have 
cited  as  matters  of  familiar  historic  record.  Borrowing  money 
upon  mortgage  security  is  mentioned  in  Nehemiah  (v.  3-11),  415 
years  before  the  Christian  era  ;  whether  from  private  bankers 
or  from  partnerships,  authorized  by  public  law,  is  not  stated 
but  the  instances  admit  of  either  form  of  brokerage. 


172  POLITICAL  ECONOMY. 

After  the  Christian  era,  about  the  8th  century,  in  the  time  of 
Haroun  Al  Raschid,  hanks  and  bankers  are  spoken  of  as  existing 
in  Persia,  India,  and  Arabia,  just  as  they  are  spoken  of  in  England 
in  the  reign  of  Charles  II. ,  A.  D.  1660-1685. 

But  through  the  inexactly  distinguished  or  bordered,  dark,  and 
middle  ages  (the  period  from  the  fall  of  the  Western  Roman  Em- 
pire in  the  5th  century  (476),  to  the  latter  part  of  the  15th,  by 
some  fixed  at  1453,  the  time  of  the  fall  of  Constantinople,  by  others 
at  1492,  the  date  of  the  discovery  of  America),  such  institutions 
as  we  now  call  banks  of  issue  had  not  come  into  existence.  In 
fact,  the  first  of  these  establishments  or  companies  was  the  Bank  of 
Sweden,  which  commenced  the  issue  of  bank  notes  proper  in  A.  D. 
1658,  that  is,  promissory  notes  payable  to  bearer  without  endorse- 
ment, of  uniform  amounts,  fitted  for  general  circulation. 

The  Bank  of  England,  which  went  into  operation  in  1694,  in 
the  reign  of  William  and  Mary,  issued  notes  of  ver-y  limited  circu- 
lation, in  denominations  of  50  pounds  ($250),  and  upwards.  These 
could  not  be  called  a  common  currency.  Although  having  the 
form  of  circulating  notes  they  were,  in  effect,  rather  certificates  of 
credit  than  a  money  of  currency. 

P.  But  were  there  no  circulating  notes  in  convenient  forms  and 
denominations  for  common  use  before  the  end  of  the  17th  century  ? 
Gunpowder,  the  mariner's  compass,  the  art  of  printing,  National 
debts,  post-offices,  were  in  existence  then  ;  and  Spenser,  Shak- 
spear,e,  Cromwell,  Milton,  Locke,  and  Bunyan  had  lived  and  il- 
luminated the  time  ;  and  Newton,  Defoe,  Addison,  Pope,  and 
Berkely  were  born  before  the  bank  note  was  made  a  medium  of 
exchange  ;  and  Dr.  Johnson,  David  Hume,  Goldsmith,  the  family 
magazines,  encyclopedias,  and  the  modern  newspaper  started  into 
full  life  in  the  immediately  preceding  generation. 

T.  Civilization,  or  in  better  phrase,  well  ordered  association  in 
communities,  must  needs  have  attained  considerable  advancement 
before  the  best  instrumentalities  of  social  and  business  interchange 
could  be  invented.  Discoveries  of  great  practical  use  arise  out  of 
the  conditions  that  demand  them  and  can  use  them.  That  is 
the  key  to  all  the  preferred  and  permanently  used  facilities  of 
commerce. 

The  invention  of  bills  of  exchange  is  commonly  attributed  to  the 


BANKING.  173 

Jews  in  the  middle  ages  ;  only,  I  suppose,  because  these  people 
were  dispersed  among  all  the  progressive  nations  of  the  earth  ; 
and  being  held  together  for  all  purposes  by  unity  of  faith  and 
interest,  they  were  in  the  circumstances  to  make  of  themselves  a 
universal  bank  or  association  of  bankers  ;  and  were  well  fitted  for 
that  function  by  the  marked  characteristic  that  they  have  ever 
been  dealers  in  money,  as  distinguished  from  producers  and  dealers 
in  other  commodities. 

These  bills  of  exchange  were  written  drafts,  cheques,  or  orders, 
made  payable  at  considerable  distances  from  the  places  of  issue, 
commonly  in  foreign  countries.  They  secured  payments  without 
the  transmission  of  coined  money,  just  as  bank  notes  do  within 
the  range  of  their  circulation  ;  but  they  differed  from  the  bank 
note  in  that  they  were  orders  for  payments  in  bulk,  that  is,  for 
round  or  indivisible  sums  of  money,  and,  in  consequence,  were 
only  suited  for  mercantile  transactions  or  remittances  of  specified 
amounts,  and  were  not  adjusted  to  such  a  varied  number  of  pounds, 
ducats,  or  dollars  as  are  required  for  ordinary  business  payments. 

These  bills  of  exchange  could  be  make  payable  on  demand,  as 
our  ordinary  bank  note  is,  or  on  time,  as  a  post  note  is.  Thus 
they  were  not  much  unlike  the  larger  bank  bills  at  first  issued  by 
the  bank  of  England.  The  circulating  bank  note,  intended  for 
domestic  commerce,  was  thus  prefigured  and  suggested  by  the  bill 
of  exchange,  which  still  serves  the  purpose  of  foreign  commerce, 
by  its  special  adaptedness  to  that  service. 

P.  The  Jews,  I  suppose,  got  the  credit  of  the  invention  from 
the  circumstances  that  they  had  their  correspondents  everywhere, 
and  had  their  inducement,  in  the  profit  of  the  business,  to  engage 
in  the  sale  of  exchanges  more  extensively  than  others  could.  The 
employment  of  the  like  mode  of  effecting  payments  abroad  would 
naturally  occur  to  any  merchants  and  money  dealers  who  had  for- 
eign correspondents  at  command.  Many  reputed  inventors  of 
other  conveniences,  have  no  other  title  to  discovery  than  an  effec- 
tive and  general  introduction  of  their  machines  into  common  use, 
if  we  may  credit  the  usual  disputes  and  contests  of  claimants, 
which  occur  even  in  the  sciences,  arts,  and  literature. 

D.  The  Bank  of  Venice  was  founded  in  A.  D.  1171 ;  the  Bank 
of  Barcelona  in  1401 ;   and  the  Bank  of  Genoa  in  1407  :    all  of 


174  POLITICAL   ECONOMY. 

them  several  centuries  before  the  Bank  of  Sweden,  and  that  of 
England. 

T.  These  institutions  called  banks,  were  for  the  most  part  cre- 
ated for,  and  served  only  as,  fiscal  agents  of  the  governments 
which  established  them.  They  united  with  this  political  service, 
in  several  forms  and  degrees,  the  office  of  banks  of  deposit,  but 
did  not  otherwise  contribute  to  the  convenience  of  commerce,  or 
the  ordinary  service  of  the  people.  For  instance,  the  earliest  of 
these,  the  Bank  of  Venice,  was  based  upon  a  forced  loan  of  that 
aristocratic  republic.  Funds  deposited  in  it  could  not  be  with- 
drawn, but  the  property  in  them  was  transferable  on  the  books  of 
the  bank  at  the  pleasure  of  the  owner — a  sort  of  stock  subscrip- 
tion, differing  in  nothing  important  from  the  relation  of  a  stock- 
holder in  a  modern  corporation.  The  subscriber,  or  his  assignee, 
derived  his  profit  from  the  premium  which  these  inscriptions  of 
credit  commanded  above  the  current  coins,  which  were  greatly 
depreciated  by  clipping,  wear  and  tear,  to  which  they  were  sub- 
ject, and  which  often  reached  ten  per  cent,  of  their  nominal  value; 
and  he  received  interest  upon  his  stock  or  deposit  guaranteed  by 
the  government.  These  conditions  made  the  investments  popular, 
as  they  were  profitable  and  safe.  The  rate  of  interest  is  stated  at 
4  per  cent.,  which  was  far  below  the  customary  charge  of  that  day, 
but  the  stockholders  were  indemnified  for  the  difference  by  other 
advantages. 

By  the  way,  perhaps  the  earliest  instance  of  the  foundation  of 
a  national  debt,  is  found  in  the  creation  of  the  Bank  of  Venice. 
The  policy  and  the  conduct  of  the  bank  was  of  course  modified  in 
the  course  of  time  by  increasing  the  service  of  which  it  was  capa- 
ble. It  continued  in  existence  and  beneficial  operation  626  years 
without  interruption,  till  the  overthrow  of  the  republic  in  1797  by 
the  revolutionary  army  of  France. 

P.  It  is  stated  that  these  bank  credits  went  sometimes  up  to 
30  per  cent,  above  the  par  of  the  coin  then  in  use.  How  could 
that  be  possible  ?  Does  it  not  indicate  a  fearful  influence  over  the 
interests  of  the  public  by  such  a  national  bank  ? 

T.  The  premium  did  go  as  high  as  30  per  cent,  over  the  cur- 
rent coins,  until  the  government  limited  it  by  decree  to  20  per 
cent.,  at  which  it  continued  permanently  fixed  so  long  as  the  bank 


BANKING.  175 

existed.     In  the  light  of  this  fact,  think  of  a  supposed  standard 
of  value. 

The  unit  of  the  money  of  account  was  the  ducat.  Venice  had 
a  gold  coin  of  that  name  which  was  held  in  high  repute  for  its 
purity.  Don't  ask  me  what  it  was  worth.  Nobody  knows.  Cer- 
tain it  is,  that  the  quality  of  this  coin  could  not  have  been  in  any 
way  concerned  in  the  agio  or  premium,  for  no  coins  passed  in  the 
transfer  of  the  bank.  Values  were  not  measured  by  them.  They 
were  measured  by  the  money  of  account. 

P.  Gould  commercial  business  be  conducted  for  600  years 
upon  credit  estimations  alone  without  being  gauged  by  money  in 
substance  ? 

T.  It  was  done  so  ;  else  the  system  which  had  no  standard  in 
metallic  money  could  not  have  been  maintained  through  half  a 
dozen  centuries  in  the  grandest  mart  of  commerce  existing  in  the 
middle  ages.  It  was  done  as  the  vast  business  of  the  present  day 
is  done,  by  set-off.  In  the  clearing  houses  of  London  and  New 
York,  hundreds  of  millions  of  debts  and  credits  are  settled  every 
day  with  balances  not  exceeding  five  per  cent,  of  their  totals,  and 
even  these  balances  not  paid  in  money.  They  are  met  the  next 
day  by  claims  which  cover  them.  It  is  all  credit.  Surely,  if  the 
whole  community  of  business  people  could  get  their  credits  set  off 
against  their  debts  they  would  not  need,  at  the  utmost,  to  receive 
more  than  their  profits  in  money,  and  only  a  fractional  part  of 
these  profits  for  current  expenses  that  cannot  go  into  clearing- 
houses for  balancing.  The  business  exchange,  through  any  means 
or  medium,  is  at  bottom,  nothing  but  barter  by  indirection.  Any 
money  of  account  is  better  for  this  purpose,  and  effects  its  ends 
and  objects  with  less  trouble  and  expense,  than  gold  and  silver 
can  do. 

P.  The  wonder-working  of  the  clearing-house  by  means  of  set- 
off is  clear  enough  in  statement.  It  seems  adequate,  and  the 
understanding  can  grasp  it  as  well  as  numerals  represent  millions 
and  myriads  of  quantity ;  but  one  must  be  familiar  with  the  idea 
before  it  serves  at  every  application  in  resolving  difficulties,  es- 
pecially when  it  displaces  and  reverses  preconceptions  of  values 
in  exchange.    But  how  does  this  set-off  agency  bear  upon  the  sur- 


17*3  POLITICAL  ECONOMY. 

prising  problem  of  the  agio  in  favor  of  a  credit  or  ideal  money 
over  the  tangible  instrument  of  commerce  ? 

T.  In  the  process  by  set-off — that  is,  in  the  balancing  of  debts — 
the  instrument,  or  medium,  or  means  must  hold  the  rank  of  a 
standard.  Shake  yourself  free  from  the  notion  that  any  particular 
medium  or  convenience  of  any  one  kind  is  intrinsically  and  exclu- 
sively the  equivalent  of  a  debt  or  of  a  purchase  price.  If  any 
one  will  pay  your  debts  and  expenses  by  exchanging  them  for  the 
debts  or  income  due  to  you,  are  not  the  mutual  accounts  settled 
and  extinguished  without  anything  passing  between  you  that  is 
called  money  having  either  an  intrinsic  or  representative  value  ? 
You  may  use  a  medium  for  this  purpose,  but  by  set-oflf  you  go 
farther  and  fare  better,  by  getting  rid  of  the  medium  itself.  You 
get  back  to  barter,  which  is  the  soul  and  essence  of  commerce. 

The  credits  of  the  Bank  of  Venice  were  par  in  payment  of  all 
debts,  absolute  and  unquestionable.  Gold  and  silver  even  quoted 
at  the  par  of  the  bank  inscriptions  were  not  nearly  so  convenient. 
This  high  grade  of  the  bank  credits  was  one  of  the  elements  of 
the  agio,  or  premium,  which  they  carried. 

P.  But  it  would  be  a  very  inconsiderable  one  in  the  great  sum 
of  the  premium  if  the  current  coins  were  worth  their  nominal 
value  in  the  ducats  of  the  bank's  money  of  account. 

T.  That  is  just  where  the  other  element  of  the  premium  comes 
in,  an  accident  or  condition  to  which  all  metallic  money  is  more  or 
less  exposed,  for  it  has  a  variable  exchange  value.  Beside  the 
ordinary  causes  of  change  in  the  price  of  the  precious  metals, 
due  to  their  varied  cost  of  production,  Venice,  during  most  of  the 
lifetime  of  the  bank,  had  a  world-wide  commerce.  For  nearly  two 
centuries — 1096  to  1290 — it  was  a  station  of  the  Crusaders  of 
AVestem  Europe,  and  all  the  coins  of  Christendom  were  poured 
into  her  market.  These  coins  were  of  every  imaginable  mintage, 
and,  besides,  were  debased  and  worn  so  much  that  all  the  skill  of 
an  expert  wras  required  to  settle  their  value.  For  common  use 
they  were  scarcely  passable.  They  had  lost  the  basis  quality  of 
money — its  convenience.  An  English  writer  of  the  17th  century 
said  :  "  The  inconvenience  and  mischiefs  that  the  currency  of  dipt 
and  counterfeit  money  necessarily  occasions  are  so  manifest  to 
everybody  that  it  is  as  needless  to  point  at  any  of  them  as  it  is 


BANKING.  177 

impossible  to  enumerate  them  all.  It  violates  all  contracts,  and 
alters  the  measure  of  trade,  breeding  confusions  in  all  commerce, 
etc." 

Indeed,  the  nuisance  of  a  coin  currency  was  the  impulse,  above 
all  others,  that  set  Europe  in  the  17th  century  upon  the  enterprise 
of  establishing  banks  of  deposit,  in  which  the  coins  might  be 
placed,  once  for  all,  out  of  the  reach  of  the  clipper  and  sweater, 
protected  from  the  abrasion  of  use,  and  safe  from  debasement, 
only  too  frequent,  by  the  governments.  A  20  per  cent,  pre- 
mium upon  the  bank  credits  over  such  a  motley  hoard  of  trash,  as 
all  these  causes  would  bring  upon  Venice,  taken  along  with  the 
valuable  service  of  the  bank,  in  the  security  and  negotiability  of 
its  credit  money,  is  credible  enough  to  any  one  who  has  ever 
handled  a  defaced  Spanish  quarter,  or  eighth  or  sixteenth  of  a 
dollar  piece. 

P.  The  history  of  banking  as  you  present  it  provokes  inquiries 
which,  perhaps,  do  not  fall  into  your  train  of  thought,  and  I  hesi- 
tate to  divert  you  by  questions  that  may  not  be  relevant. 

T.  I  do  not  occupy  you  with  a  history  of  banking.  That  you 
must  look  for  in  books  and  treatises  written  with  that  intention.  I 
only  notice  facts  that  serve  to  elucidate  the  theory  of  currency, 
and  so  endeavor  to  keep  within  the  limits  of  our  discussion.  Only 
too  much  of  narrative  invades  our  line  of  remark.  I  wish  to  im- 
press upon  you  the  uses,  the  conveniences,  and  the  adaptedness,  of 
the  mediums  employed  in  the  exchanges  of  business. 

You  will  notice  the  fact,  for  it  is  important  to  us,  that  the  Bank 
of  Venice,  by  a  forced  loan  of  the  government,  made  the  public 
debt  thus  contracted  the  basis  of  the  currency  of  the  Republic,  and 
that  although  the  process  was  despotic  and  had  in  it  the  nature  of 
wrong,  it  at  last  adjusted  itself  happily  and  beneficially  to  the 
best  service  of  the  community,  and  came  in  good  time  to  command 
the  acquiescence  and  cordial  support  of  all  the  parties  concerned. 

A  striking  coincidence  occurs  in  the  history  of  our  first  United 
States  Bank.  Let  me  give  an  illustrative  incident,  in  brief:  — 
When  General  Washington  was  on  his  way  to  his  first  inaugura- 
tion at  New  York  he  met  Robert  Morris,  the  financier  of  the  Revo- 
lution, in  the  presence  of  Bishop  White,  in  Philadelphia.  Im- 
pressed by  the  great  question  of  the  time,  he  said  to  Mr.  Morris, 


178  POLITICAL  ECONOMY. 

"  What  can  be  done  with  our  terrible  debt?  (terrible  for  the  time 
and  circumstances  of  the  new  government — it  was  fully  7o  millions 
of  dollars).  Mr.  Morris  replied,  "  Having  frequent  occasion  dur- 
ing the  war  to  consult  Colonel  Alexander  Hamilton  upon  the  most 
effective  devices  for  meeting  the  exigencies  of  the  time,  allow  me 
to  refer  you  to  him  for  an  answer  to  your  question."  Washington, 
not  a  little  surprised  at  so  confident  and  so  respectful  a  reference 
to  his  private  secretary  (his  amanuensis ;  a  youth  who  had  only  dis- 
tinguished himself  as  a  field  officer  and  tactician),  by  the  most  com- 
petent adviser  that  could  be  found,  immediately  called  Hamilton 
to  a  conference,  and  bluntly  put  to  him  the  question,  "  What  shall 
Ave  do  with  our  terrible  debt?"  "Bank  on  it,"  said  Hamilton; 
"  our  debt  is  the  only  capital  that  we  have,  and  is  the  best  of  all 
securities  for  a  banking  basis — the  faith  of  the  nation,  and  through 
that  faith,  the  whole  property  of  the  nation  and  all  the  prospects 
of  the  country,  is  an  unquestionable  pledge  of  eventual  solvency ; 
and  will  be  immediately  and  concurrently  an  instrument  of  the 
common  business  of  the  people  needing  such  aid  and  support." 

The  issue  vindicated  the  policy  fully,  and  even  far  exceeded 
the  expectation  of  the  great  projector. 

Do  not  forget,  or  pass  lightly  over  these  instructive  experiences, 
but  carry  them  with  you,  as  correctives,  in  your  estimates  of 
credit-money,  ideal  money,  money  of  account,  rag-money,  and 
promises  to  pay. 

Adam  Smith  compared  paper  money  to  a  wagon-road  through 
the  air,  in  contrast  with  a  solid,  substantial  road  upon  terra  firma, 
or  a  medium  of  the  precious  metals.  The  electric  telegraph  and 
the  telephone  are  as  much  exposed  to  whatever  there  is  in  the 
comparison,  and,  for  aught  I  know,  the  balloon  may  at  last  fall  into 
the  same  predicament. 

The  American  government,  having  no  practicable  track  for  its 
financial  travel  on  the  solid  ground  of  a  money  pavement,  resorted 
to  the  airy  substitute,  and  somehow  effected  its  deliverance  from 
its  great  despair,  and  from  the  dissolution  of  the  Union,  through 
financial  bankruptcy.  The  man  who  divined  the  situation  and 
the  remedy,  who,  in  the  language  of  Daniel  Webster,  "touched 
the  dead  body  of  the  public  credit,  and  it  started  into  life,"  was 
made  Secretary  of  an  empty  Treasury,  and  within  a  period  that 


BANKING.  179 

was  measured  by  months,  not  by  years,  established  the  credit  of 
the  new-born  nation,  so  perfectly  that  he  was  able  to  borrow  all 
the  money  that  he  needed  in  Europe,  upon  terms  as  favorable  as 
any  established  government  in  Christendom  could  secure.  The 
condition  of  living  by  faith,  even  in  material  things,  is,  keep  the 
faith,  fight  the  good  fight,  and  the  crown  of  victory  is  assured. 

D.  You  seem  determined  to  shake  the  maxim:  "  Pay  as  you 
go,"  from  its  position  in  pecuniary  affairs.  The  examples  cited 
seem  to  have  that  rather  questionable  tendency. 

T.  You  seem  not  to  be  able  to  get  rid  of  the  idea  that  gold  and 
silver  are  the  only  substantial  money  medium,  or,  at  least,  the 
only  sure  basis  of  a  credit  system.  In  this,  however,  you  are  im- 
plicitly following  the  doctrine  of  the  "  Father  of  Political  Econ- 
omy." Adam  Smith  says,  oracularly,  that  "  the  total  paper 
money  which  can  circulate  without  injury  in  a  country,  can  never 
exceed  the  value  of  the  gold  and  silver  of  which  it  takes  the 
place,  and  which,  if  commerce  remained  the  same,  would  circulate 
there  if  there  was  no  paper  money  in  circulation." 

D.  Worse  and  worse!  You  would  make  me  a  heretic  to  the 
established  creed.  Apostasy  is  apt  to  call  itself  liberty,  and  par- 
don me,  sir,  there  is  some  audacity,  as  well  as  some  insecurity,  in 
thus  throwing  off  the  guidance  of  commonly  received  opinion  and 
venerated  authority. 

BANK  OF  GENOA. 

T.  I  suppose  the  Apostles  were  right  in  resisting  the  Pharisees, 
and,  that  pernicious  theories  in  any  department  of  thought  ought 
to  be  repudiated.  But,  to  the  point  of  your  repugnance.  I  am 
not  opposing  the  policy  of  "  pay  as  you  go,"  if  credit  money 
really  is  payment ;  and  I  am  right  in  saying  that  law  and  custom 
both  hold  it  to  be  so. 

Some  shallow  adviser  induced  General  Jackson,  when  he  was 
in  his  fury  against  the  rotten  bank  system  of  the  States,  and 
especially  against  the  ill-conducted  United  States  Bank,  to  say 
that  "  those  who  live  by  borrowing  ought  to  break."  To  which 
the  reply  offers  itself,  that  a  man  without  capital  must  never  ob- 
tain any  upon  the  pledge  of  his  integrity,  industry,  and  capacity; 


180  POLITICAL  ECONOMY. 

that  is,  to  be  born  poor  is  to  be  doomed  to  beggary.  Fathers  and 
heroes  are  not  always  inspired,  and  the  world  cannot  stereotype 
the  wisdom  of  any  generation  of  men,  until  they  bring  in  the 
millennium,  in  proof  that  they  are  right,  and  always  right. 

D.  I  will  drop  the  debate  if  you  will  not  construe  my  silence 
into  assent. 

T.  The  Bank  of  Genoa  was  founded  A.  D.  1407,  after  a  long 
period  of  civil,  social,  and  monetary  disturbance.  The  finances  of 
the  State  were  in  a  w-retched  condition.  Unlike  the  Bank  of 
Venice,  its  capital  was  furnished  by  voluntary  subscriptions,  in  a 
clear  perception  of  its  promised  advantages  to  the  State  and  to  the 
business  people.  The  contributors  did  not,  as  in  the  case  of  the 
Bank  of  Venice,  repose  their  faith  in  the  Government.  They  in- 
sisted upon  the  best  securities  which  it  could  give  them  for  all 
advances  made  to  it.  They  organized  the  best  checks  which  they 
could  devise  against  its  encroachments,  and  held  wTithin  their  own 
hands  the  power  and  direction  of  the  bank's  management — a  con- 
trolling influence  which  they  maintained  through  generations  of 
foreign  and  civil  wars.  The  interest  of  the  money  lent  to  the 
Government  was  secured  to  the  bank  by  the  assignment  of  taxes, 
customs,  and  other  incomes  of  the  State;  and  thus,  the  stockholders 
were  assured  of  the  dividends  which  the  business  afforded. 

The  lire  was  the  unit  of  the  money  account,  which  was  held 
very  closely  corresponding  to  the  franc  of  France,  worth  at  our 
mint  valuation  about  19J  cents.  As  a  significant  instance  of  the 
caution  observed  in  the  management  of  this  bank,  the  forms  of  its 
books  were  rigidly  prescribed,  and  these  records  were  annually 
transferred  to  another  office,  out  of  the  hands  of  its  officers,  and 
subjected  to  inspection  and  explanation.  These  regulations  were 
enforced  for  centuries.  The  private  bankers  of.  the  city,  also,  were 
placed  under  strict  regulations.  The  bank  shares  and  deposits 
were  exempted  by  law  from  attachment,  for  either  public  or  private 
claims. 

I  have  given  these,  otherwise  unnecessary  details,  for  the  pur- 
pose of  showing  that  this  great  money  institution  was  treated  as  a 
subordinate  branch  of  the  civil  government,  notwithstanding  its 
general  independence  as  a  private  property  ;  that  the  common 
money  function  might  be  as  well  guarded  for  the  benefit  of  the 


BANKING.  1^1 

public  as  any  other  interest  of  the  community,  on  the  ground  that 
the  provision  of  circulating  money,  and  it^  administration  is,  and 
of  right  ought  to  be,  a  government  duty  and  prerogative.  This  is 
a  point  well  worthy  of  consideration. 

P.  In  this  respect  the  former  practice  of  our  Federal  Govern- 
ment seems  to  have  been  strangely  remiss.  It  took  care  that  the 
materials  and  weight  of  our  coins  should  be  governed  by  a  uniform 
national  law,  but  left  the  regulation  of  banks  of  issue  to  the  juris- 
diction of  a  quarter  of  a  hundred  separate  States  in  the  Union, 
which  acted  without  concert,  and  generally  without  prudence,  in 
empowering  their  local  banks  tojoroduce  what  effect  they  might 
upon  the  paper  currency. 

T.  By  establishing  the  National  banking  system  which  has 
worked  so  well  in  the  last  18  years,  and  by  taking  the  State  banks 
out  of  existence  as  manufacturers  of  paper  money,  the  United 
States  government  aroused  itself  to  the  legitimate  exercise  of  its 
proper  sovereignty  ;  confining  the  circulating  note  to  its  own  super- 
vision, and  with  the  greenback  issues  taking  the  absolute  and  ex- 
clusive control  of  the  currency  in  paper,  as  it  always  had  done  in 
respect  to  the  coinage  of  the  precious  metals. 

To  continue  our  history  of  the  progressive  forms  of  banking  we 
must  further  consider  the  history  of  this  Bank  of  Genoa.  It  some- 
what enlarged  the  sphere  of  service  to  the  commercial  community 
by  providing  notes  that  could  be  used  in  the  larger  transactions, 
and  by  otherwise  relieving  the  transfer  of  funds  of  tedious  and 
troublesome  formalities.  It  did  not  emit  bills  of  small  denomina- 
tions, nor  for  uniformly  fixed  or  graded  amounts,  but  in  sums  re- 
quested by  the  persons  accommodated.  This  is  not  what  we  un- 
derstand by  circulating  notes.  Our  forms  of  the  bank  note  were 
not  yet  reached.  Such  issues  were  in  effect  only  due-bills  or  cer- 
tificates of  deposit,  and,  I  believe,  were  written  by  the  officers, 
and  of  determinative  and  unequal  denominations. 

P.  The  public  must  have  had  pocket  money  and  pieces  suited 
for  use  in  form  of  coins  for  their  smaller  purchases  and  payments. 

T.  Of  course  they  had.  But  the  inconvenience  of  carrying 
coins  about  for  the  necessary  purposes  of  trade  is  obvious.  It  is 
among  us  manifested  by  the  fact  that  the  Secretary  of  the  Treasury 
finds  it  impossible  to  keep  any  considerable  amount  of  silver  afloat 


182  POLITICAL   ECONOMY. 

in  the  face  of  our  small  note  circulation.  Two-thirds  of  the  dollar 
pieces  which  the  mint  has  been  coining  under  a  compulsory  act  of 
Congress  lie  corded  up  in  the  Treasury  vaults,  while  certificates 
of  deposit  are  made  to  represent  nearly  one-half  of  them  in  busi- 
ness. Even  the  fractional,  or  as  they  are  styled,  subsidiary  coins, 
are  encumbering  the  Treasury  safes.  People  will  not  make  pack- 
horses  of  themselves  in  the  service  of  a  so-called  real  money. 
They  may  wish  to  be  assured  that  it  is  in  the  vaults  of  the  banks 
for  the  redemption,  or  rather  for  the  insurance  of  their  notes,  upon 
the  practical  principle  that  if  the  banks  have  it  their  note-holders 
don't  want  it,  and  if  the  banks^  have  it  not  the  note-holder  will 
insist  upon  getting  it. 

You  may  have  endorsed  a  promissory  note  to  meet  the  rerpuire- 
ment  of  a  money-lender,  and  never  heard  of  your  liability  after- 
wards. That  is  exactly  the  service  rendered  by  any  surplus  of 
coin  in  the  country  beyond  the  pocket  money  supply  for  every- 
day expenses.  The  payment  of  balances  of  foreign  trade  may 
demand  bullion,  but  that  commodity  should  never  be  allowed  to 
encroach  upon  the  provision  of  coined  money  of  the  realm. 

P.  You  say  that  the  Bank  of  Genoa  had  not  made  of  itself  a 
common  commercial  agent  for  over  266  years  of  its  existence — 
not  until  1673.  How  or  in  what  manner  was  its  public  service 
extended  at  that  time  ? 

T.  That  common  nuisance,  the  coinage  of  divers  mintages,  the 
fraudulent  deterioration,  and  the  diminished  value,  by  wear  and 
tear,  which  was  the  plague  of  the  Middle  Ages,  and  of  all  the 
periods  afterwards,  before  the  substitution  of  the  circulating  note, 
made  foreign  exchange,  and  especially  domestic  commerce,  a  griev- 
ance that  pressed  for  a  remedy  ;  and,  as  I  have  said,  was  among 
the  most  forcible  motives  which  induced  the  establishment  of  banks 
of  issue.  The  great  expansion  of  the  maritime  and  domestic  trade 
in  the  17th  century  imperiously  demanded  a  systematic  order  of 
money  exchanges.  The  republic  granted  to  the  bank  the  neces- 
sary powers,  and  went  even  a  step  farther  than  thus  gratifying 
that  institution.  It  made  all  bills  of  exchange  of  any  amount,  and 
all  other  debts  over  100  lires.  (or  francs)  payable  at  the  bank, — 
thus  making  it  a  great  central  clearing-house  of  all  debts  and 
credits  above  this  minimum.     At  the  same  time  the  transfers  of 


BANKING.  183 

its  deposits  and  of  the  shares  of  its  stockholders  were  relieved  of 
troublesome,  and,  in  some  cases,  almost  impracticable,  conditions. 
The  changes  effected  made  the  bank  a  sub-medium  of  the  money 
system  which  put  all  the  more  considerable  transactions  of  com- 
merce under  an  organized  central  machinery,  but  left  pocket- 
money  loose  in  its  own  vagrancy ;  or,  allow  me  to  say,  left  hard 
money  to  perform  its  hard  service  as  best  it  could. 

D.  You  are  preparing  the  way  for  the  advent  of  bank  notes  by 
a  constant  exhibition  of  all  the  ills  that  coins  are  heir  to. 

T.  It  is  their  inherent,  more  than  their  accidental  ills,  that 
compelled  the  resort  to  a  remedy.  Their  weight,  bulk,  difficulty 
of  safe  keeping,  variable  value  of  their  metal ;  their  special  lia- 
bility to  counterfeiting,  to  clipping,  sweating,  plugging,  and  abra- 
sion, stick  to  them  like  original  sin  and  actual  transgression.  For 
ostentation  they  jingle  well,  and  for  glitter  they  are  attractive  ; 
still,  however,  I  admit  that  they  are  great  in  little  things,  which 
is  not  a  little  thing  to  be  and  to  do. 

P.  The  Genoese,  then,  had  in  use  two  kinds  of  currency,  of 
very  unequal  value,  under  the  same  denominations  ;  and,  curiously 
enough,  the  coins,  and  not  the  paper,  were  at  a  discount. 

T.  The  circulation  in  coins  and  the  money  of  common  accounts 
was  called  fuori  banco  (out  of  bank  money).  The  bank  money 
was  called  volute  banco,  which  was  always  at  a  premium,  because 
of  its  better  ascertained  and  more  available  exchange  value,  and 
of  its  greater  convenience  in  its  special  use.  We  also  had  a 
difference  in  values  under  the  same  money-names,  when  our  cir- 
culating notes  were  depreciated.  They  were  commonly  called 
currency,  to  distinguish  them  from  gold  and  silver,  which  were 
then  demonetized,  and  were  a  marketable  commodity  of  variant 
price  in  currency;  the  premium  upon  gold  ranging,  during  the 
suspension,  from  one  to  one  hundred  and  eighty-five  per  cent.  So 
much  for  standards  of  value  in  money  theories. 

It  remains  to  be  noticed  that  the  bank-bills  of  Genoa  were  only 
substitutes  of  notes  for  coins.  They  did  not  add  anything  to  the 
amount  of  the  existing  currency. 

P.  You  say  that  the  coin  deposits  in  the  Bank  of  Venice  were 
not  reimbursable  to  the  depositors.     How  is  that  ? 

T.  I  should  have  said  that  the  money  of  the  contributors  to 


184  POLITICAL  ECONOMY. 

the  capital  of  the  Bank  of  Venice  was  not  a  gift  or  a  tax  in  effect ; 
nor  yet  a  loan,  of  which  the  principal  was  to  be  replaced  at  a 
time  specified,  or  at  any  time.  It  was  a  subscription  or  invest- 
ment, like  that  in  the  British  consols,  amounting  now  to  over  500 
millions  of  pounds  sterling,  which  do  not  take  the  name  or  char- 
acter of  a  debt  redeemable,  or  of  a  principal  payable  to  the 
lender,  but  is  distinctively  called  a  perpetual  annuity;  because 
under  the  terms  of  the  loan,  the  government  has  only  bound  itself 
to  pay  3  per  cent,  per  annum  upon  a  sum  equal  to  every  hundred 
pounds  credited  to  the  holder.  The  government  is  under  no  con- 
tract obligation  ever  to  return  the  principal.  The  ownership  of 
the  claim  for  the  annual  interest  is  transferable.  The  stock  or 
fund,  as  it  is  called,  is  always  salable,  but  at  variant  prices.  The 
nominal  hundred  pounds-worth  at  one  time  sold  as  low  as  54  per 
cent.,  which  raised  the  interest  payable  upon  the  investment 
nearly  equal  to  6  per  cent.  Half  a  dozen  years  ago  this  fund 
sold  at  about  93  per  cent.  Very  lately  it  has  been  up  to  99,  and 
even  to  par.  These  more  ordinary  rates  depend  in  great  part 
upon  the  rate  of  interest  which  money  carries  in  the  market.  The 
lowest  rate  mentioned  was  occasioned  by  the  threatened  insolv- 
ency of  the  exchequer,  or  its  probable  necessity  for  borrowing 
large  sums  at  a  heavy  discount  during  the  war  with  France. 

P.  Do  national  debts  sometimes  represent  a  larger  amount  than 
the  money  received  from  the  lenders? 

T.  Nations  have  a  ruling  policy  of  not  paying  above  a  certain 
nominal  rate  of  annual  interest,  and  when  they  cannot  borrow  at 
that  rate,  they  must  take  as  much  less  than  a  hundred  for  the 
hundred  acknowledged,  as  will  bring  the  interest  upon  the  sum 
received  up  to  the  current  rate.     For  instances: — 

Great  Britain  borrowed  in  the  years  1781,  1782,  1783,  and 
17i»4  £43, 500,000,  for  which  she  issued  stocks  amounting  to 
,£1)5,248,000,  nominally  at  3  and  4  per  cent.,  with  terminable  an- 
nuities added.  Here  was  an  aggregate  of  principal  debt  sold  at 
33J  per  cent,  discount.  On  a  large  amount  of  loans  created  in 
1812,  1813,  1815,  nominally  issued  as  three  per  cents.,  she  re- 
ceived so  much  less  cash  as  brought  the  interest  on  the  money  paid 
into  her  treasury  up  to  4J  per  cent. ;  and  in  1847, 1855,  and  1856, 
she  issued  stocks  to  the  amount  of  £34,000,000,  at  3  per  cent., 


BANKING. 


185 


for  which  she  received  but  .£30,315,500 — a  discount  upon  the 
principal  of  10.94  per  cent.,  bringing  the  actual  interest  up  to 
3.37  per  cent. 

In  our  own  troublous  time — the  year  1851,  with  the  Rebellion 
on  our  hands— Mr.  Chase,  Secretary  of  the  Treasury,  sold  6  per- 
cent, loans  to  the  amount  of  $60,409,000,  for  which  he  received 
only  $53,813,596,  a  discount  of  10.91  per  cent. 
P.  Is  there  prudence  or  policy  in  such  a  system  ? 
T.  For  the  policy  I  cannot  answer.  It  may  be,  or  is,  a  fancied 
necessity,  to  avoid  the  announcement  of  an  inordinately  high  rate  of 
interest,  and  the  discount  suffered  may  be  concealed  or  not  alarm- 
ingly estimated ;  but  when  the  principle  or  the  debt  comes  to  be  reim- 
bursed at  its  exaggerated  amount,  and  when  the  real  rate  of  interest 
that  runs  upon  it  are  counted  up  together,  the  illusion  of  a  nomin- 
ally lower  rate  of  interest  will  be  seen,  if  not  felt.  For  a  long 
time  the  French  rentes  were  sold  at  6Q,  which  the  Government  must 
at  last  refund  at  100,  and  in  the  mean  time  pay  3  per  cent,  per 
annum  upon  the  fictitious  34  in  her  account.  There  must,  I  sup- 
pose, be  something  in  this  policy  which  has  induced  its  adoption 
so.  generally. 

P.  National  debts  !  They  usually  hold  a  higher  character  than 
any  others.  But  are  there  no  historic  instances  of  States  who 
have  failed  to  redeem  their  pledges  ? 

T.  Only  too  many  are  on  that  record.  Some  because  they 
cannot,  others  because  they  will  not.  Some  of  the  States  of  this 
Union  have  repudiated  their  debts,  and  counties  and  cities  have 
done  or  endeavored  to  do  the  like,  on  one  pretence  or  another. 
The  late  Southern  Confederacy  is  utterly  and  hopelessly  bankrupt, 
but  its  creditors  ran  the  risk  and  took  their  chance.  They  must 
abide  by  their  bargain  under  its  obvious  conditions.  One  must 
not  quarrel  with  the  horse  he  staked  his  money  on  because  he  lost 
the  race. 

There  is  a  form  of  virtual  repudiation  of  State  debts  that  we 
have  heard  too  much  of.  Hamilton  nobly  resisted  the  effort  to 
disavow  the  obligations  of  the  Revolutionary  Government,  to  the 
■  extent  that  it  was  contracted  in  the  depreciated  currency  and  high 
prices  of  the  darkest  day  of  the  great  struggle  for  our  National 
independence  ;  and  there  are  those  among  us  who  urge  the  like 
13 


186  POLITICAL  ECONOMY. 

abatement  of  our  debt,  contracted  in  the  time  of  the  late  rebellion 
of  the  Confederate  States,  on  the  same  grounds.  They  are  indif- 
ferent to  the  fact  that  the  price  paid  for  National  bonds  was  the 
best  that  could  be  got  for  them  in  the  then  state  of  the  Nation's 
credit;  and  above  all,  they  forget,  that  the  original  purchasers  did 
contribute  to  the  support  of  our  armies  in  the  money  of  the  time  ; 
and,  over  and  above  all  other  considerations,  they  do  not  hesitate 
to  violate  the  faith  of  the  Republic,  pledged  for  the  payment  of  so 
many  dollars  as  are  named  in  the  bond.  The  cry  of  bloated  bond- 
holders cannot  exonerate  National  perfidy.  King  David,  who  was 
in  position  as  much  above  the  municipal  law  as  any  sovereign  state 
can  be,  describing  those  who  shall  never  be  moved,  but  shall  abide 
in  the  tabernacle  of  the  Lord,  and  dwell  on  His  holy  hill,  is  par- 
ticular to  include  the  very  strong  case  of  him  "  who  sweareth  to 
his  hurt  and  changeth  not"  (Psalm  xv.  1-5).  The  fathers  mort- 
gaged the  inheritance  which  we  hold  from  them  with  the  incum- 
brances for  the  necessary  and  unavoidable  expenses  of  its  improve- 
ment and  defences.  Their  last  will  and  testament  reads  thus:  — 
"  After  all  our  just  debts  are  paid,  we  give  and  bequeath  all  the 
estate  of  which  we  may  die  possessed,  real,  personal,  and  mixed, 
to  our  children;"  and  we  are  bound  to  take  the  estate  on  these 
conditions,  else  we  allow  the  testators  to  be  buried  as  bankrupts 
at  the  expense  of  their  creditors. 

BANK  OF  AMSTERDAM. 

T.  Let  us  return  now  to  the  history  of  banking  at  the  stages 
of  its  advancement  in  principles  and  policy  which  may  afford  us 
the  required  instruction  of  a  careful  inquiry.  The  Bank  of  Am- 
sterdam, founded  in  1609,  has  in  its  conduct  and  fortunes,  a 
curious  and  instructive  revelation  of  the  governing  principles  of 
banking,  and  of  currency  as  well.  In  the  17th  century,  Holland 
was  in  fact  the  first  naval  power  of  the  world,  and  the  largest  in 
maritime  commerce.  She  disputed  and  divided  the  supremacy  of 
the  ocean  with  England.  In  1667  a  Dutch  fleet  sailed  up  the 
Thames  and  blockaded  London.  It  is  true  Cromwell  was  then 
gone,  and  one  of  the  most  incapable  and  meanest  of  the  Stuarts 
was  on  the  throne  ;  but  from  the  close  of  the  16th,  throughout 


BANKING. 


187 


the  17th  century,  Holland  held  the  principal  seat  of  commerce  in 
the  Indian  archipelago  ;  and  it  was  a  saying  at  the  time  that  all 
the  world  was  clothed  in  English  wool  woven  in  Flanders.  This 
indicates  the  vastness  of  its  commerce,  foreign  and  domestic,  and 
the  consequent  employment  of  the  common  medium  of. purchase 
and  sale.  The  policy  of  Cromwell  between  1653  and  1658,  and 
the  equally  sound  and  wise  administration  of  the  industrial  inter- 
ests of  France  by  Colbert,  nearly  at  the  same  time,  greatly 
diminished  the  economic  rule  of  the  Dutch  in  foreign  trade,  until 
the  imbecility  and  misgovernment  of  Charles  II.  of  England,  and 
the  foolish  tyranny  of  Louis  XVI.  of  France,  in  the  latter  years 
of  his  reign,  forfeited  the  advantages  that  wiser  councils  had 
secured  up  to  the  middle  of  the  century,  and  a  few  years  later. 

The  intolerable  nuisance  of  the  coin  currency,  as  elsewhere, 
compelled  the  adoption  in  the  Netherlands  of  the  better  curreney, 
and  as  usual  in  all  progressive  movements  affecting  business  com- 
munities, the  first  advancement  in  the  money  policy  was  made  for 
the  relief  of  the  wholesale  trade,  and  the  Bank  of  Amsterdam,  for 
long  after  its  establishment  must  be  described  as  a  bank  of  dis- 
count and  deposits,  but  materially  modified  upon  the  plan  of  its 
predecessors.  Gradually  some  of  the  main  features  of  a  per- 
fected credit  system  were  infused  in  the  framework  of  the  deposit 
banks  of  the  earlier  time,  and  for  a  while,  they  held  a  middle 
place  between  the  hard-money  and  the  systematic  paper  medium 
scheme  of  payment — between  touch  and  trust,  in  the  business  of 
exchange. 

P.  In  this  stage  of  development,  were  not  such  payments  vir- 
tually only  a  mere  transfer  of  the  ownership  of  certain  quantities 
of  coins,  and  so,  another  method  of  hard-money  payment,  without 
adding  anything  to  the  available  stock  of  the  currency  ? 

T.  Under  this  system,  only  so  much  of  a  credit  system  obtained 
that  the  convenient  transfers  of  the  property  in  the  inactive  coin 
money  required  the  faith  of  the  parties  using  it,  was  necessarily 
given  to  the  actual  existence  of  the  redemption  funds  ;  but  that 
the  idea  of  its  existence  answered,  as  well  as  the  substance  repre- 
sented could  do,  we  have  the  most  conclusive  evidence  in  the  sub- 
sequent history  of  this  institution. 

I).  It  is  easy  to  understand  that  speculators  in  fancy  stocks  can 


188  POLITICAL  ECONOMY. 

buy  and  sell  shares  which  they  know  do  not  exist,  on  the  plan  of 
paying  or  receiving,  at  a  future  day,  the  difference  of  the  price 
in  their  market — wagering  that  they  will  go  up  or  down  in  the 
broker's  auction,  just  as  they  might  play  at  hazard  in  moonshine 
— but,  how  can  business  men  be  induced  to  risk  their  interests  upon 
airy  nothings,  sported  by  legally  organized  public  corporations 
whose  debts  and  promises  to  pay  should  be  realities,  but  are  not  ? 

T.  Facts  are  not  to  be  disputed  because  difficult  of  explanation. 
They  are  not  theoretical  fancies  ;  and,  I  submit  for  solution,  the 
established  fact  that  the  Bank  of  Amsterdam,  holding  the  best 
reputation  for  solvency,  and  sustaining  it  by  the  strictest  punctu- 
ality in  meeting  all  claims  for  nearly  two  hundred  years;  effect- 
ing exchanges  estimated  at  five  thousand  millions  of  dollars  per 
annum,  and  with  great  commercial  benefit  to  the  city  of  Amster- 
dam and  its  multitude  of  customers,  was,  in  the  year  1790,  discov- 
ered to  have  squandered  all  its  capital  full  fifty  years  before  ! — yet, 
for  that  half  century,  had  performed  the  functions  of  a  money 
agency  just  as  well  with  the  reputation  of  a  capital  which  had  been 
abstracted  as  if  it  had  all  the  while  held  it  in  gold  and  silver  in 
its  vaults.  "What  difference  in  use  can  there  be  between  an  un- 
employed or  hoarded  dollar,  and  a  reliance  upon  a  non-existent 
dollar  ? 

D.  You  mean,  of  course,  that  a  secui'ity  is  not  brought  into 
actual  service  until  its  promised  performance  is  called  for.  Yet  I 
cannot  admit  that  a  fraud,  a  hollow  falsehood,  is  as  good  as  a  fact, 
a  thing  truly  what  it  purports  to  be. 

T.  Neither  do  I.  The  instance  cited  is  only  used  to  show  that 
a  shadow  can  serve  instead  of  a  substance,  and  serve  as  well  in 
pecuniary  dealings,  until  the  disappointed  touch  dispels  the  illu- 
sion— that  a  good  actor  may  very  effectively  personate  a  veritable 
hero.  Image  worship,  in  acceptable  representatives  of  the  un- 
seen, is  not  unusual  in  any  kind  of  human  doings.  Faith  is  an 
effective  factor  in  all  the  uses  of  credit,  and  we  can  all  the  better 
understand  its  uses  by  looking  into  its  abuses.  A  picture  makes 
a  good  report  of  a  face  or  of  a  landscape,  though  it  is  really  neither 
of  them. 

That  the  Amsterdam  bank  was  fatally  mismanaged  is  proved  by 
its  catastrophe,  for  success  is  the  true  rule  of  judgment  in  matters 


BANKING.  189 

of  policy  and  expediency  ;  but  it  is,  also,  clear  enough  that  there 
was  no  fraud  in  its  conduct.  It  lent  its  entire  capital  to  the  States- 
General,  to  the  East  India  Company,  and  to  the  city  government 
of  Amsterdam, — all  good  customers,  and  all  solvent,  but  neither 
of  them  able  to  make  instant  restitution  in  time  to  support  the 
credit  of  the  institution.  (It  is  not  a  little  remarkable  that,  with 
the  example  of  the  banks  of  Venice  and  Genoa  before  it,  it  had 
not  made  the  principal  of  these  debts  transferable.)  The  bank 
was  in  verity  solvent,  all  the  time  that  it  was  bankrupt  in  the 
means  of  meeting  the  subsisting  demands  of  its  stockholders  and 
creditors.  If  it  only  could  have  substituted,  as  occasion  demanded, 
the  credit  of  its  principal  debtors  for  that  of  its  own  exhausted 
coffers,  it  would  have  been  safe.  The  bank  really  had  the  money 
to  meet  all  its  engagements,  but  had  it  not  in  its  own  hands  when 
the  emergency  came  upon  it.  Like  the  foolish  virgins  of  the 
parable,  the  lamp  which  it  carried  had  gone  out,  and  the  time  did 
not  serve  for  replenishing  it,  notwithstanding  it  had  in  reserve  the 
purchase  price  to  buy  the  oil  that  might  have  kept  it  burning 
and  shining  for  another  series  of  centuries. 

P.  In  this  story,  telling  strongly,  as  it  does,  of  the  power  of 
the  credit  system,  there  lurks  a  per  contra  charge  of  its  risks.  If 
the  governments  which  borrowed  the  bank's  capital  could  not 
refund  it  in  the  hour  of  need,  they  were  just  as  impecunious  at 
all  other  times  in  the  interval. 

T.  Governments  are  always  out  of  cash  when  they  are  bor- 
rowers ;  but  they  are  not,  therefore,  out  of  credit,  which  is  evi- 
denced by  the  fact  that  they  are  able  to  borrow.  They  pledge  in 
security  the  faith  of  the  nation,  which  is  always,  under  some  con- 
ditions, convertible  into  the  means  of  payment  in  ordinary  busi- 
ness transactions.  Their  bonds  are  anticipations  of  future,  but 
available,  resources.  They  are  the  strongest  examples  of  the 
credit  system.  The  common  faith  in  the  faith  of  the  nation 
becomes  to  the  people  "  the  very  substance  of  the  things  hoped 
for." 

P.  Oh,  I  see.  If  the  bank  had  held  the  government  debts  as 
transferable,  and  used  them  so  in  its  current  transactions,  all 
dealers,  willing  to  purchase  parts  or  shares  in  that  fund,  would 
have  taken  them  in  liquidation  of  their  claims,  or  the  bank  could 


190  POLITICAL  ECONOMY. 

have  sold  them  even  at  a  profit,  and  so  have  replenished  its  coffers 
and  restored  its  loaned  capital.  But  it  kept  these  loans,  which 
abstracted  its  whole  capital,  secret. 

In  the  last  quarter  of  the  last  century  the  universal  political 
disturbances  on  the  Continent  of  Europe  threw  doubts  upon  the 
faith  and  solvency  of  the  governments  ;  and  it  was,  perhaps,  not 
good  policy  to  risk  the  credit  of  the  bank  on  the  insecure  security 
of  thrones  and  dynasties  that  were  everywhere  in  peril. 

Things  have  changed.  The  nations  that  are  stable  in  their 
polity  now  publish  their  debts  without  reserve  ;  and,  I  suppose, 
that  the  capitalists  who  invest  their  money  in  the  bonds  of  the 
United  States,  intending  to  replace  it  by  an  immediate  and  profit- 
able sale  of  the  national  debt,  are  not,  in  intention,  mere  money 
lenders,  waiting  for  their  reimbursements  for  twenty,  thirty,  or 
forty  years,  but  are  only  traffickers  in  the  fund. 

T.  There  are  some  other  things  in  the  history  of  this  bank  well 
worthy  of  notice,  but  I  can  now  refer  only  to  one  of  them :  The 
market  of  Amsterdam  was  gorged  with  a  coin  currency  flowing  in 
from  all  quarters,  and  of  all  kinds,  which  was  terribly  depreciated, 
in  the  average  10  per  cent,  below  its  nominal  value.  All  foreign 
and  domestic  bills  of  exchange  for  sums  over  600  florins  (probably 
about  $450)  were  made  payable  at  the  counter  of  the  bank.  De- 
posits of  coin  with  it  were  scrutinizingly  tested,  and  the  value  so 
ascertained,  less  5  per  cent.,  was  placed  to  the  credit  of  the  deposi- 
tors. As  the  premium  upon  the  bank  money  was  equal  to  this 
deduction,  the  owner  of  the  coin  was  compensated  for  the  deduction. 
The  coins  or  bullion  placed  in  the  bank  were  not  reclaimable  in 
kind,  but  were  locked  up  in  the  bank  vaults.  By  law  these  credits 
were  exempt  from  seizure  or  attachment.  They  were  held  sacred, 
in  theory,  for  the  money  service  of  the  community.  The  govern- 
ment thus  asserted  its  right  and  duty  to  protect  the  currency  which 
it  authorized. 

When  it  was  found  that  the  credit  paper  of  the  bank  w:as  larger 
than  the  market  demand  for  it,  the  bank  bought  up  the  surplus  at 
4  per  cent.  They  had  been  sold  by  the  bank  at  a  premium  of  5 
per  cent.,  and  this  practice  of  relieving  the  money  market  of  their 
excess  kept  them  steadily  within  1  per  cent,  of  their  par  price. 
A  very  similar  provision  in  principle  has  been  suggested  by  the 


BANKING.  191 

plan  of  making  our  National  bonds  inter-convertible  with  greenback 
notes,  by  funding  the  notes  at  a  low  rate  of  interest  when  they  are 
in  excess  of  the  business  demand,  and  restoring  them  again  to  the 
needed  circulation  ;  steadiness  and  adequacy  of  the  circulating 
money  supply  being  the  aim  of  the  arrangement  in  both  cases.  This 
is  a  flexibility  of  great  importance  in  addition  to  the  other  conven- 
iences of  the  money  medium :  a  very  simple  contrivance,  and  a  very 
practicable  one,  especially  as  a  check  to  speculation.  Bat  we  have 
not  yet  reached  such  perfection  in  the  policy  of  the  money  supply. 
Dr.  Rush  believed  that  the  spleen,  which  to  physiologists  had 
appeared  to  be  a  supernumerary  organ  in  the  human  constitution, 
was  a  basin  held  by  the  hand  of  nature  to  withdraw  the  casual 
excess  in  the  blood  supply  from  the  ordinary  channel  of  its  circu- 
lation in  exigencies,  and  to  restore  it  again  when  required  for  the 
uses  of  the  general  system  in  its  normal  movements.  Such  hints 
in  nature  are  often  directory  in  thought  and  practice  in  correspond- 
ing situations  occurring  in  the  conditions  of  social  agencies. 

D.  The  Bank  of  Amsterdam,  among  its  other  devices  dealt  in 
brokerage  of  its  own  debts.  But  the  business  of  dealing  in  money 
seems  to  be  a  tampering  with  that  thing  which  ought  to  be  a  fixed 
measure  and  standard  of  exchange,  as  sacred  from  alteration  as 
bushels,  steelyards,  and  yard-sticks.  I  don't  wonder  that  Moses, 
15  centuries  before  the  Christian  era,  forbade  usury,  as  he  explains 
the  word,  lending  upon  increase  (Leviticus  xxv.  26). 

T.  Moses  prescribed  this  law  for  a  theocratic  government,  for  a 
peculiar  people  in  peculiar  circumstances,  and  marked  the  exclu- 
siveness  of  its  application  by  expressly  allowing  the  Israelites  to 
take  usury  or  interest  from  strangers  (Deut.  xxiii.  20) — from  "the 
heathen  round  about;"  and  the  survivors  of  that  race  have  been 
always  rather  distinguished  as  money-jobbers. 

The  employment  of  money' in  the  business  of  earning  money, 
hiring  it  for  wages,  is  every  way  justifiable  ;  and  when  it  thus 
enters  the  commodity  market,  it  is  as  fairly  subject  to  profit  and 
loss  as  other  commodities  are  ;  for  the  effort  to  find  in  it  an  inva- 
riable value  must  be  given  up.  Exchange  being  simply  interchange 
of  values,  the  subjects  are  incapable  of  estimation  other  than  a 
relation  to  each  other,  and  not  a  relation  to  some  third  or  inter- 
mediate thing,  as  a  means  of  measuring  them.     Money  of  account 


192  POLITICAL  ECONOMV. 

is  the  expression  of  values,  and  as  such  is  the  only  true  measure  in 
exchanges. 

As  to  the  point  that  troubles  you — the  brokerage  by  the  bank 
of  its  own  debts — there  is  so  much  of  equity  in  it  that  it  made  its 
money  worth  5  per  cent  premium  in  its  ordinary  movement,  and 
redeemed  it  when  it  was  in  excess,  at  a  profit  so  small  as  did  no 
more  than  pay  the  cost  of  the  transaction  ;  and  at  the  same  time 
rendered  the  service  of  protecting  their  paper  from  falling  below 
4  per  cent,  in  the  hands  of  the  holders,  as  it  might  have  done 
under  the  free  dealings  in  it  by  speculators.  This  brokerage,  as 
you  call  it,  was  a  sure  defence  against  black  Fridays  in  the  Wall 
Street  of  Amsterdam. 

BANK  OF  HAMBURG. 

T.  In  the  history  of  the  Bank  of  Hamburg,  established  in  1619, 
ten  years  after  that  of  Amsterdam,  we  have  another  instance  of  the 
prevailing  nuisance  of  the  coins  in  circulation  at  the  time,  and  of 
the  compulsory  substitution  of  a  representative  credit  money.  This 
bank  bad  been  in  the  practice  of  receiving  the  German  rix-dollar 
at  its  face  value,  but  the  Empire  issued  a  coin  of  the  same  name 
deteriorated  5  per  cent,  in  value.  The  effect  was  that  the  bank 
was  compelled  to  stop  its  operations  for  a  time.  In  1770  it  re- 
sumed business  on  a  new  unit  of  value,  the  marc  banco;  which  has 
never  had  a  coin  representative,  but  as  a  money  of  account  was 
worth  about  3*2  cents,  or  one-tenth  of  the  old  English  coin  called  a 
marc  or  mark.  The  silver  pieces  used  in  this  bank  money  (47 
parts  fine  to  one  of  alloy)  were  for  a  long  while  at  a  premium 
above  the  coins  in  general  circulation  of  from  20  to  30  per  cent. 

I).  Twenty  to  thirty  per  cent,  of  fluctuation  in  the  value  of 
real  mo*>ey  again  in  1770,  as  in  Amsterdam  and  in  Venice,  be- 
tween bank  money  and  coins,  four  or  five  hundred  years  before. 
Even  now  among  ourselves  the  legal  standard  silver  dollar  is 
quoted  at  about  12  per  cent,  below  the  par  of  gold  and  of  convert- 
ible bank  paper.  What  are  we  to  do  for  a  standard,  by  which  we 
may  know  how  much  is  the  exchange  value  of  the  money  in  our 
pockets  ? 

T.  The  African  coast  negroes,  having  none  of  the  conveniences 


BANKING.  193 

of  a  medium  of  payment,  and  who  thereby  escape  the  fluctuation 
of  its  intrinsic  value  in  contracts,  are  no  better  oft*  than  we  are. 
One  of  them  cannot  be  certain,  for  a  day  in  advance,  of  the  pur- 
chasing power  over  tobacco  or  muslin  that  there  is  in  the  yams  in 
his  bag.  The  landlord  at  Pittsburg,  who,  seventy  years  ago, 
granted  leases  for  "  the  term  of  the  existence  of  this  world,"  did 
his  best  for  his  heirs  by  providing  that  the  rent  should  be  paid  in 
Spanish  milled  dollars  of  a  fixed  weight  and  fineness,  or  their 
equivalent  in  silver,  but  he  could  not  be  sure  how  much  of  com- 
modities they  would  purchase,  or  how  much  debt  they  would  pay 
in  the  following  generations. 

P.  The  history  of  coined  money  seems  to  be  full  of  perplexity. 
The  silver  in  the  Roman  penny  piece,  mentioned  in  the  New  Test- 
ament, was,  fifty  years  ago,  valued  at  seven  pence  half-penny 
English  sterling;  silver  being  estimated  at  (30  pence  per  ounce 
troy.  It  is  not  worth  nearly  that  amount  in  their  money  of  ac- 
count now.  Coins,  because  they  have  an  intrinsic  value,  are 
regarded  as  better  for  hoarding  than  bank  notes  are,  but  one  can- 
not be  certain  of  their  value  in  exchange  when  they  shall  be 
unearthed.  I  have  been  amused  when,  since  the  resumption  of 
specie  payments,  I  have  received  a  quarter  or  a  half  dollar  minted 
before  December,  1861,  and  evidently  hid  away  for  its  greater 
certainty  of  value,  for  about  18  years,  and  find  it  sneaking  back 
to  its  duty  at  a  loss  in  its  estimated  value  of  sometimes  12,  some- 
time 20  per  cent.  The  "almighty  dollar"  has  not  the  theolog- 
ical quality  of  the  nunc  stems;  it  is  manifestly  not  safe  from 
"  variableness  neither  shadow  of  turning  ;"  it  is  rather  that  other 
thing — "  all  things  to  all  men." 

T.  Let  us  not  laugh  at  it,  nor  at  the  meretricious  qualities  con- 
ferred upon  it  by  theorists.  It  is,  after  all,  the  very  life-blood  of 
the  business  organism  ;  a  little  thinner  and  less  nutritious,  a  little 
quicker  or  slower  in  circulation,  at  times,  but  still  the  great  dis- 
tributor of  the  supplies  required  for  the  maintenance  and  growth 
of  our  material  interests.  Solomon  did  not  overstate  the  work  of 
its  service  when  he  said  "  money  answereth  all  things." 

P.  I  derive  from  the  facts  presented,  and  fully  supported  by 
our  own  observations,  that,  however  well  coined  money  may  suit 
the  purposes  of   small   transactions   in  retail   trade,  it  does   not 


104  POLITICAL    ECONOMY. 

conveniently  serve  in  the  larger  operations  of  business,  and,  not  at 
all  in  foreign  exchange,  at  its  nominal  value. 

T<  The  precious  metals,  in  the  form  of  bullion,  are  proper  sub- 
jects of  foreign  commerce,  but  the  coins  of  the  realm,  required  for 
domestic  use,  are  out  of  place  in  that  trade. 

The  Bank  of  Hamburg  is  still  a  living  and  useful  institution. 
Its  service  is  that  of  making  the  precious  metals  available  in  pay- 
ments to  the  utmost  extent  of  which  they  are  capable,  while 
avoiding  their  inconvenience  and  abuses.  There  is  room  and 
place  for  such  corporation,  without  the  more  generally  associated 
issue  of  circulating  notes,  in  every  large  business  city.  Some 
such  have  always  existed,  proving  their  necessity. 

P.  These  older  banks,  which  we  have  been  considering,  may 
be  classed  as  banks  of  deposit,  and  so  distinguished  from  our 
modern  banks  of  discount,  deposit,  and  issue  ;  for,  although  for 
the  accommodation  of  wholesale  and  foreign' trade,  they  substi- 
tuted their  own  notes  or  certificates,  the  credit  so  issued  was  not 
adapted  to  retail  dealings  and  ordinary  expenses  ;  that  is,  they 
were  not  graded  in  small  denominations  or  fixed  sums,  such  as 
one,  five,  twenty,  and  fifty  dollars  notes.  They  were  not  properly 
circulating  notes,  but  were  rather  orders,  drafts,  or  transfers  of 
deposits, — immensely  useful  in  their  way,  but  not  substitutes  or 
representatives  of  the  small  coins  or  small  notes  which  daily  busi- 
ness demands. 

T.  We  have  followed  the  history  of  the  banking  s}7stem  in  its 
formative  stages  for  the  purpose  of  analyzing  its  principles.  To 
trace  its  development  up  to  our  own  time,  we  must  notice  the 
characteristic  forms  it  has  taken  in  the  English,  Scotch,  French, 
and  American  modes  of  its  workings. 

BANK  OF  ENGLAND. 

T.  I  am  as  tired  of  repeating,  as  you  can  be  of  hearing,  the 
universal  wail  of  the  16th  and  17th  centuries  over  the  evils  of  the 
coin  circulation  in  Europe.  Notwithstanding  the  insular  position 
of  England,  and  her  then  small  foreign  trade,  and  employment  as 
a  common  carrier  of  the  nations,  it  was  alleged  that  the  debased 
coin  used  in  purchasing  her  products  for  exportation,  in  the  da}rs 
of  Elizabeth,  robbed  the  producers  of  five-sixths  of  their  value. 


BANKING.  195 

This  must  have  been  an  over-statement.  But  the  loss  must  have 
been  indeed  very  great  to  keep  in  countenance  such  an  exaggera- 
tion. It  is  probable  enough  that,  at  its  worst,  the  metallic  medium 
was  as  vexatious  and  injurious  as  ever  a  depreciated  paper  cur- 
rency has  been  at  any  time  or  place  where  it  was  not  utterly 
worthless. 

The  reasons  urged  for  the  establishment  of  banks,  and  the  plans 
for  their  conduct,  from  the  time  of  the  protectorate  of  Cromwell 
to  the  reign  of  William  and  Mary,  are  in  a  high  degree  interesting 
and  instructive,  too,  but  I  must  not  undertake  a  display  of  them. 
The  treatises  published  on  the  principles  and  policy  of  the  banking 
system  from  that  time  down  to  the  present  day  would  fill  a  public 
library.      Mr.   Colwell   had   1800   of  them  upon   the  subject  of 
money  alone  in  his  collection,  and  he  might  have  collected  1800 
more  if  he  had  been  curious  to  show  that  "  of  the  making  of  books 
and  pamphlets  (on  that  subject)  there  is  no  end." 
P.  Did  Mr.  Colwell  read  all  these  treatises  ? 
T.  I  put  that  question  to  him  once.     He  answered  :   "  Enough 
to  know  that  there  is  almost  nothing  in  them."    They  are  all  now 
in  the  library  of  the  Pennsylvania  University  at  Philadelphia, 
where  they  may  be  consulted.     His  own  work,  entitled  Ways  mid 
Means  of  Payment,  exhausts  the  subject  without  exhausting  the 
reader.     Mr.  Carey's  treatment  of  the  topic  in  that  part  of  his 
Social  Science  which  he  entitles,  "  Of  the  Instrument  of  Associa- 
tion,"  throws   a   cross-light  upon  the   philosophy  of  money  and 
banking  which   will    serve    to    thoroughly    complete    the    study. 
Together  these  two  authors  will  repay  the  closest  attention,  which 
leaves  very  little  to  be  desired  in  that  branch  of  political  economy. 
P.  You  are  familiar  with  the  books  which  you  so  highly  com- 
mend.    Were  these  gentlemen,  or  were  they  not,  biased  by  their 
commitments  in  other  departments  of  economic  doctrrne  in  their 
treatment  of  this  one  ? 

T.  Read  them  with  whatever  caution  such  an  apprehension  may 
fairly  induce.  I  have  not  found  the  evidence  of  any  damaging 
prepossessions  or  warping  theories  in  either  of  them. 

But  to  the  matter  immediately  in  hand.  I  will  not  detain  you 
from  what  we  shall  have  to  say  of  the  Bank  of  England  by  a 
reference  to  the  discontent  of  the  English  people  under  the  evils 


196  POLITICAL    ECONOMY. 

of  their  coinage  further  than  by  saying  that  it  pressed  Edward 
VI.  (1547-1553)  upon  an  effort  to  devise  a  remedy,  which,  how- 
ever, he  left  unexecuted.  His  successor,  Mary,  in  her  brief  reign 
of  five  years,  succeeded  no  better,  and  it  was  left  to  the  heroic 
Elizabeth  to  achieve  the  best  that  could  be  done  in  her  time 
(1558-1603). 

During  the  latter  half  of  the  16th  century  the  current  of  thought 
and  the  plans  for  relief  ran  in  the  direction  of  establishing  agencies 
for  the  substitution  of  credit  money  as  a  simple  representative  of 
the  coinage  which  was  found  to  be  entirely  unfit  for  the  business 
exchanges  of  the  time  ;  but  the  scheme  of  deposit  banks,  so  suc- 
cessfully employed  on  the  Continent  in  the  first  half  of  the  cen- 
tury, does  not  seem  to  have  been  seriously  or  hopefully  consid- 
ered. The  exchange  machinery  supplied  for  the  larger  transactions 
of  trade,  by  the  London  goldsmiths,  by  its  facilities  of  transfer  in 
the  property  and  service  of  coin,  seemed  to  suffice  for  the  manage- 
ment of  metallic  money  ;  and  the  issue  of  their  negotiable  notes, 
receipts,  or  other  evidences  of  debt  for  deposits,  had  become  a 
familiar  currency,  answering  well  within  the  limits  of  their  capa- 
bility. The  value  of  this  agency  remains  a  theme  of  admiring 
report  in  our  common  histories.  All  writers  speak  of  it  as  a 
model  or  typical  idea  of  the  money  policy,  and  it  is  not  surprising 
that  its  advantages  and  successes  should  have  captivated  its  con- 
temporaries. But  it  worked  as  a  barrier  to  improvements  which 
were  departures  from  its  well-approved  system.  Communities 
hardly  ever  change  their  favorite  customs  for  untried  better  ones. 
It  is  generally  severely  felt  inconveniences  that  put  practical 
people  upon  improvements  ;  and  it  did  not  occur  to  the  projectors 
of  Elizabeth's  time  to  merge  the  depository  in,  or  combine  it  with, 
a  systematic  credit  system  answering  all  its  intentions. 

No  public  ever  was  busier  than  the  British  during  a  whole  cen- 
tury previous  to  the  opening  of  the  Bank  of  England  with  schemes 
to  amend  the  common  money  medium  which  they  were  all  using 
and  complaining  of  so  grievously.  Speculative  projects  ran  as 
wild  then  as  they  do  now  without  the  grounds  of  a  like  complaint. 
The  press  groaned  under  treatises  giving  all  sorts  of  reasons  for 
all  sorts  of  schemes  ;  some  of  them  resting  on  commodity  pledges, 
some   upon  landed  securities,  and  some  few  upon  no  security  at 


BANKING.  197 

all.  An  index,  or  table  of  their  contents,  would  do  good  by  show- 
ing inventors  that  there  is  nothing  new  on  that  subject  under  the 
moon. 

P.  Your  friend,  Mr.  Carey,  is  reported  as  saying:  "  Meet  any 
man  on  the  street  and  ask  him  to  make  a  hat,  or  a  coat,  or  a  pair 
of  boots  for  you.  Every  one  of  a  thousand  strollers  would  answer, 
'  Sir,  I  never  learned  either  of  those  trades.'  But  if  you  ask  for 
a  banking  system  or  state  constitution,  nine  in  ten  of  them  will 
accommodate  you  with  a  theory  as  infallible  as  a  panacea,  a 
catholicon,  or  an  anti-bilious  pill.  Even  in  conventions  of  world- 
menders  one  of  every  ten  is  equally  competent  and  ready.  They 
are  just  as  able  to  distil  tallow  out  of  rain-water  as  anybody  that 
ever  went  into  the  speculation." 

T.  Yes,  in  the  judgment  of  inspired  economists,  the  experts  of 
study  and  experience  are  the  incapables.  They  scorn  the  idea  of 
working  and  waiting  for  the  millennium  that  is  to  come  in  the  ful- 
ness  of  time  ;  they  prefer  lugging  it  into  realization  by  the  head 
and  shoulders.  They  answer  insuperable  objections  and  doubts 
of  their  competency  by  declaring  that  they  have  a  right  to  think 
for  themselves,  overlooking  the  fact  that  they  are  assuming  the 
right  to  think  and  act  for  other  people,  who  probably  prefer  to 
have  their  thinking  upon  unfamiliar  subjects  done  by  people  skilled 
in  the  business. 

D.  St.  James  expressed  the  opinion  that  it  is  the  professional 
priests  and  prophets  that  bring  "  damnable  heresies"  into  the  cause 
of  religion  ;  and  it  is  certain  that  the  very  biggest  blunders  have 
been  made  in  other  matters  by  men  holding  the  position  of  coun- 
sellors and  guides.  So  that  in  the  average  the  common  sense  of 
common  men  has  the  advantage  over  professionals  and  doctrinaires. 

T.  The  multitude  has  this  advantage  of  projectors,  that  they  have 
the  trying  and  testing  of  the  projects  which  concern  them.  Their 
judgments  are  formed  upon  experience,  which  if  it  does  not  test  the 
truth,  certainly  does  test  the  expediency  of  the  thing  proposed. 
They  do  not  take  responsibility  for  opinions  about  the  unknown 
and  untried.  The  pioneers  of  thought  and  action  put  their  predic- 
tions upon  record.  The  common  sense  judgment  gets  the  oppor- 
tunity of  the  after-thought.  The  men  of  forethought  are  often 
exposed  to  the  vulture  of  criticism.     Genius  blunders  oftener  by 


198  POLITICAL    ECONOMY. 

putting  trust  in  those  who  must  incarnate  its  conceptions,  than  by 
the  mistakes  for  which  it  is  rightfully  answerable. 

But  the  Bank  of  England  is  waiting  upon  us  for  a  hearing,  as  it 
waited  a  century  or  so  on  the  wrangles  of  theory  previous  to  its 
inauguration.    Disputation,  however  unavoidable,  hinders  business. 

The  Bank  of  England  crept  into  existence  not  as  a  formal  cor- 
poration chartered  by  that  name,  but  under  the  guise  of  "  an  Act 
of  Parliament  granting  their  Majesties — William  and  Mary — ■ 
several  duties  upon  tonnage  of  ships,  and  upon  beer,  ale,  etc., 
for  securing  certain  recompenses  to  such  as  should  subscribe 
.£1,200,000  to  a  fund  at  8  per  cent."  The  subscribers  thus  be- 
came in  effect  a  bank.  They  paid  or  loaned  their  whole  capital  to 
the  Government  at  8  per  cent.  ;  and  the  money,  instead  of  being 
stored  in  its  vaults,  was  scattered  throughout  the  kingdom.  The 
cash  took  the  form  of  a  National  debt,  and  became  a  credit  fund. 

D.  Then  the  capital  was  but  the  shadow  of  the  cash  which  it 
represented,  daguerrotyped  upon  the  books  of  the  bank.  "  What 
shadows  we  are  and  what  shadows  we  pursue." 

T.  The  shadows  that  are  "  types  of  good  things  to  come  "  can- 
not disappoint  the  hope  worse  than  the  touch  of  a  Midas  that  turns 
everything  to  gold.  Still  it  is  true  that  expectation  often  embraces 
a  cloud  where  it  grasped  for  a  goddess.  Yet,  the  credit  of  the  bank 
did  not  then  fail  when  its  entire  capital  was  vested  in  the  National 
debt,  and  it  is  not  now  injuriously  affected  because  fourteen-fif- 
teenths  of  its  present  capital  is  in  the  National  securities.  Just 
now  about  15  millions  of  pounds  sterling  in  Government  stock  and 
securities,  with  about  25  millions  in  gold  and  silver  is  found,  after 
long  experience,  to  be  an  adequate  basis  for  55  millions  of  liabili- 
ties. And  none  of  the  mischiefs  which  it  inflicts  upon  the  public 
are  the  fault  of  its  securities  ;  but,  paradoxical  as  it  may  seem,  the 
worst  of  its  operations  are  in  the  measures  which  it  adopts  to  insure 
its  solvency. 

As  a  pertinent  fact  in  the  history  of  modern  banking  it  is  to  be 
noted  that  it  was  the  first  joint-stock  bank  erected  in  England,  and 
that  so  lately  as  the  year  1004,  and  that  it  continued  to  be  the 
only  one  in  London  until  the  year  183  L  At  that  date  it  was  fol- 
lowed by  the  London  and  Westminster,  which  proceeded  success- 


BANKING.  199 

fully  and  was  quickly  followed  by  the  London  Joint  Stock,  and  the 
Union  Bank  of  London. 

P.  How  do  the  resources  of  the  bank  usually  stand  to  its  lia- 
bilities ? 

T.  The  proprietors'  capital  in  May,  1877,  when  the  condition 
was  regarded  as  fairly  good,  was  ,£14,553,000 ;  rest,  £3,003,480 ; 
private  deposits,  £22,480,099;  circulation,  £29,077,985;  coin 
and  bullion,  £25,004,621 .  Adding  to  the  circulating  its  post  notes, 
£337,059,  its  total  liabilities  amounted  to  £58,210,(393.  Subtract- 
ing  its  coin  and  bullion  leaves  its  liabilities  at  £33,206,072,  and 
to  cover  this  liability  over  its  specie  on  hand  its  securities  amounted 
to  £36,269,552  ;  this  over-balance  of  available  resources  was  its 
rest  of  £3,063,480.  The  bank,  therefore,  was  able  to  pay  on 
demand,  without  converting  any  of  its  available  resources  outstand- 
ing, 43  per  cent,  of  its  liabilities  in  specie.  A  less  percentage  than 
this  is  regarded  as  an  ample  provision  of  redemption  fund  for  banks 
in  °-ood  credit  in  the  ordinary  condition  of  the  money  market.  I 
believe  that  25  per  cent  is  deemed  quite  sufficient.  In  a  panic,  of 
course,  the  soundest  bank  as  well  as  a  perfectly  solvent  merchant, 
whose  funds  are  largely  in  the  hands  of  its  customers,  may  be 
pressed  to  a  suspension  of  payment. 

P.  A  statement  which  I  find  among  the  notes  which  you  have 
submitted  for  our  consideration,  exposes  extremely  variable  rates 
of  interest  or  discount  charged  upon  its  loans  and  advances  upon 
immature  bills  and  accommodation  paper,  ranging  all  the  way 
from  2  to  10  per  cent. — rates  sometimes  lower  than  the  lowest 
usual  hire  of  money  in  England,  and  sometimes  higher  than  the 
highest  possible  yield  of  profit  to  the  borrower.  What  does  this 
mean  ? 

T.  Such  wide  and  wild  changes  of  the  bank  rates  sometimes 
mean  a  scare,  sometimes  an  honest  necessity,  and  sometimes,  I 
believe,  are  a  trick  of  the  money  trade.  When  the  rate  is  low,  it 
is  because  the  funds  would  otherwise  lie  idle  and  profitless  ;  when 
the  demand  is  light,  the  interest  charged  falls ;  when  it  is  great  and 
urgent,  the  rate  rises,  as  in  the  dealings  in  other  commodities. 
Food  is  a  drug  in  the  market  when  it  is  over-abundant.  In  times 
of  scarcity  it  goes  up  to  starvation  prices.  In  business,  carried 
on  by  the  largest  and  soundest  dealers,  it  is  done  largely  upon 


200  POLITICAL    ECONOMY. 

credit ;  the  credit  of  the  dealers  employing  and  discounting  the 
credit  of  their  customers.  Banks  are  the  usual  intermediates  by 
which  they  anticipate  payment  of  their  bills  receivable. 

But  it  is  not  only  in  expectation  of  profitable  investments  that 
money  is  sought  for.  When  debts  mature,  money  must  be  had  to 
avoid  bankruptcy,  and  in  pressing  exigencies  it  will  command  rates 
of  interest  that  correspond  to  the  scarcity  and  starvation  prices  of 
the  food-market.  The  pinch  of  the  necessity  may  arise  from 
either  a  magnitude  of  the  demand  or  a  deficiency  of  the  supply, 
and  a  money  institution  of  high  credit,  has  then  command  of  the 
situation.  The  Bank  of  England  has,  beside  this  natural  advan- 
tage, a  background  support  in  its  charter  which  requires  it,  in  a 
fixed  relation  of  its  resources  to  its  liabilities  to  either  shut  down 
upon  its  customers,  or  to  check  their  demands  for  its  accommoda- 
tions by  raising  its  rates  of  interest  to  a  height  that  drives  all  but 
the  desperately  necessitous  from  its  auction  sales  of  credit.  How 
this  policy,  partly  real,  partly  imaginary,  and  partly  speculative, 
is  capable  of  working,  I  need  not  stop  to  explain  or  expose.  Think 
of  a  corner  in  wheat  or  coal,  or  in  any  other  necessary  of  life,  and 
you  have  a  sample  of  a  money  stringency,  actually  existing  or  arti- 
ficially and  artfully  produced  or  exaggerated.  In  such  a  scarcity 
of  supply  to  meet  an  urgent  demand,  you  have  an  analogue  of 
tio-ht  money  markets.  Think  of  credit  as  the  food  of  the  great 
commodity  exchange,  as  it  is  now  conducted,  and  you  have  its 
fluctuations  explained  by  a  sort  of  object  teaching.  You  may  see 
it  sufficiently  well  by  its  running  correspondence  to  appetite,  hun- 
ger, and  the  conditions  of  the  diet  which  they  require  for  growth 
and  gratification. 

P.  What  a  picture  !  The  butcher  at  his  stall  in  the  shambles, 
sometimes  begging  custom,  lest  his  stock  shall  spoil  on  his  hands  ; 
sometimes,  when  you  are  hungrily  importunate  for  the  nourish- 
ment on  which  your  life  depends,  making  your  necessity  the  meas- 
ure of  his  exactions.  How  like  the  banker,  offering,  proffering 
Ms  wares,  on  your  own  terms,  when  your  wants  are  not  pressing 
at  2  per  cent.,  and  holding  them  at  five  times  that  price  when 
your  needs  are  the  sorest ! 

D.  How  I  am  relieved  of  a  long  strain  upon  my  feelings  and 
opinions  by  your  finding  a  hole  in  the  cloak,  that  by  the  ampli- 


BANKING.  201 

tude  of  its  theoretic  doublings  and  infoldings  cannot  quite  cover 
the  disasters  that  mark  its  wear  and  tear  in  actual  use.  It  may 
be  allowed  that  the  credit  system  does  "  raise  the  wind,"  but  it 
must  also  be  admitted  that  it  is  fairly  responsible  for. the  financial 
storms  which  it  brews.  Is  it  because  it  rises  into  gusts  sometimes 
that  your  Pennsylvania  Dutchmen  call  payments  of  debts  in  instal- 
ments by  the  figurative  name  of  gales  ? 

T.  The  capability  of  great  service  in  the  inventions  of  men  are 
just  the  things  that  are  liable,  under  mismanagement,  to  the  great- 
est abuses.  You  have,  doubtless,  occasionally  suffered  severely 
from  the  law  of  gravitation,  which  usually  holds  you  steady  on 
the  earth,  when  you  have  made  a  misstep  in  your  adjustment  to 
its  power. 

P.  Your  explanations  already  made,  may  cover  and  include  the 
difficulties  that  there  are  in  understanding  the  procedure  and  the 
policy  of  banking,  but  one  unfamiliar  with  the  subject  requires  to 
have  the  thing  turned  inside  out  and  exhibited  on  all  sides,  to 
assure  him  that  he  has  the  theory.  Allow  me,  for  this  reason,  to 
ask  for  the  indications  in  bank  reports  that  the  fluctuating  rates 
of  interest  are  required  or  justified. 

T.  There  is  a  pretty  close  connection  between  the  amount  of 
the  reserve  held  by  the  Bank  of  England  and  the  rate  of  interest 
charged.  For  instance,  when  its  reserve  of  notes  and  coin  was, 
in  May,  1876,  thirteen  millions  of  pounds,  the  discount  was  at  2 
per  cent.;  in  May,  1877.  the  reserve  was  eleven  millions,  nearly, 
and  the  discount  rose  to  3  per  cent. ;  in  May,  1867,  the  reserve 
being  the  same,  the  discount  was  also  at  3  per  cent.;  in  May, 
1874,  the  reserve  being  down  to  nine  and  six-tenth  millions,  the 
discount  was  4  per  cent.  In  1875  the  rate  of  discount  did  not 
rise  in  proportion  to  the  fall  of  the  reserve,  which  was  then  one 
and  a  fifth  millions  below  that  in  1874  ;  "the  discount  was  then  lower 
— 3|  per  cent.  The  London  Economist  gives  as  a  reason  that 
the  value  of  money  tended  to  fall  at  that  time  was  in  the  absence  of 
demand  for  gold  from  Germany,  and  for  the  further  reason,  that 
trade  was  generally  quiet.  The  rate  was  lowered  because  there 
was  no  probability  of  a  run  upon  the  specie  in  the  bank's  vaults. 
P.  You  speak  of  the  "Reserve"  as  consisting  of  coin  and 
notes.  What  notes  are  these  ? 
14 


202  POLITICAL  ECONOMY. 

T.  They  are  notes  held  unused  by  the  "Banking"  department 
of  the  bank.  To  understand  these  notes  as  a  reserve  coupled 
■with  coin  in  statement,  and  having  a  like  effect  upon  the  resources 
of  the  bank  as  set-off  against  its  liabilities,  you  must  understand 
that  the  institution  is  a  couple  of  distinct  but  united  offices.  The 
charter  of  1844  limits  the  amount  of  bank  notes  issuable  by  the 
"  Issue"  department  to  the  "  Banking"  department  to  the  aggre- 
gate value  of  the  gold  and  silver  in  possession  added  to  the  gov- 
ernment debt  to  the  bank.  At  the  date  mentioned  these  securities 
amounted  to  ,£39,228 ,650  (the  gold  and  silver  in  the  issue  de- 
partment being  £24,228,650,  and  the  government  securities 
£15,000,000).  To  the  exact  amount  of  these  securities,  the 
banking  department  receives  from  the  issue  department  circulat- 
ing notes  for  its  business  transactions  with  the  public.  That 
portion  of  these  notes  which  the  banking  department  does  not  put 
out  constitutes  its  "  reserve  "  in  notes. 

The  reserve,  mentioned  in  the  periodical  reports  of  the  banking 
department,  is  not  the  gold  and  silver  account  of  the  issue  depart- 
ment— that,  -with  the  national  securities,  stands  back  as  bail  or 
security  for  the  liabilities  of  the  banking  department,  as  our 
national  bonds,  deposited  in  the  Treasury,  are  simply  securities 
for  the  notes  issued  from  it  for  circulation  by  the  banks.  The 
reports  of  the  hanking  department  mean  by  its  reserve  the  small 
quantity  of  gold  and  silver  required  for  its  customary  business, 
and  the  unused  notes  on  hand.  This  reserve,  in  the  case  men- 
tioned, consisted  of  notes  £10,150,665,  and  of  gold  and  silver 
£.775,971  (observe  that  these  notes  are  a  real  reserve,  because 
they  represent  their  equivalent  of  specie  in  the  issue  department, 
which,  if  need  be,  can  be  drawn  by  returning  the  notes  to  it). 

The  sum  of  the  assets  in  precious  metal  is  that  deposited  in  the 
issue  department,  £24,228,650,  and  £775,971  in  the  banking 
department;  so  that  the  bank  had  £25,004,621  in  coin  again-t 
£29,415,044  in  notes  outstanding,  but  while  the  bank  thus  held 
4i  millions  less  of  coin  than  it  had  outstanding  in  notes,  it  had  its 
15  millions  of  government  debt,  convertible  through  the  money 
market  into  coin;  leaving  it  10§  millions  of  surplus  on  that  ac- 
count. But  it  had  at  the  same  time  29  millions  of  deposits  which 
it  was  liable  to  pay  on  demand.     For  the  difference  it  must  rely 


BANKING. 


203 


upon  its  outstanding  loans,  which,  if  available,  would  more  than 
meet  the  liability  :  the  credit  of  its  debtors  being  the  security  for 
its  debts  over  and  above  its  means  in  hand. 

D.  There  is  a  good  deal  of  complexity  in  the  machinery  of  the 
bank.  I  cannot  trust  my  arithmetic  to  ascertain  its  solvency  in 
any  state  of  its  condition,  or  from  such  data,  imagine  its  risks. 
And  I  should  like  to  know  whether  it  has  ever  been  in  danger  of 
failure. 

T.  That  it  has  been  more  than  once  in  danger  of  a  suspension 
of  specie  payments  within  the  last  36  years,  under  its  present 
charter,  and  that  it  did  so  suspend  in  effect,  is  palpable. 

I).  What  is  the  evidence  of  this  charge  ? 

T.  Sir  Robert  Peel,  by  the  bank  charter  of  1844,  which  he 
passed  by  his  influence  through  Parliament,  limited,  as  before 
stated,  the  note  circulation  of  the  banking  office  to  the  amount  of 
the  gold  and  silver  in  the  issue  department,  added  to  the  national 
securities,  also  held  there.  These  securities  stand  at  the  back, 
but  behind  the  back  of  the  banking  office,  and  are  available  for  its 
debts  only  after  it  has  failed  to  meet  and  discharge  them.  Be- 
side its  debt  upon  its  outstanding  notes,  it  has  an  immense  debt  to 
its  depositors.  Its  specie  is  less  than  a  million,  its  liabilities  on 
demand  are  equal,  all  told,  to  nearly  60  millions.  Is  there  not  a 
possibility  of  a  pinch  in  this  condition  of  things  ?  The  facts  of  its 
history  answer.  The  managers  in  1844,  cried  out  in  their  appre- 
hension of  an  immediate  suspension,  to  her  Majesty's  Privy  Coun- 
cil, for  permission  to  violate  the  restriction  in  its  charter.  That 
is,  for  the  privilege  of  issuing  notes  beyond  the  value  of  the 
securities  in  the  issue  department.  In  1847  the  bank  appealed 
for  the  like  relief,  and  obtained  it.  In  both  these  instances  it 
must  suspend  its  operations  or  go  beyond  its  ability  to  redeem  its 
promises  to  pay  on  demand.  Again,  in  1866  (the  third  time  in 
22  years),  to  relieve  it  and  its  customers  from  distress,  the  Privy 
Council  extended  the  same  privilege  or  authority  to  evade  the 
condition  imposed  by  its  charter  ;  but  the  mere  possibility  of  the 
release  answered  the  purpose,  and  it  tided  over  the  shallows  with- 
out actually  availing  itself  of  the  proifered  tug-boat  assistance. 

A  strongly  illustrative  instance  is,  in  effect,  thus  given  by  one 
of  the  safest  authorities  upon  English  finance  :  — 


204  POLITICAL  ECONOMY. 

"A   drain   of   gold   set  in,  in   1857,  for  money  was  as  ranch 
needed  in  France  and  Germany  as  in  England  and  America.    The 
necessity  for  sending  large  sums  of  silver  to  the  East,  to  meet  the 
demands  occasioned  by  the  Persian  and  Chinese  wars,  added  to 
the  mischief.     The  bank  raised  its  rate  of  discount  in  six  weeks 
from  6  to  10  per  cent.  ;  but  even  so,  it  was  unable  to  maintain  its 
reserve.     By  the  11th  of  November  the  stock  of  coin  and  bullion 
had  fallen  to  £6,675,000,  and  the  reserve  of  notes  to  ,£957,710. 
The  demands  to  which  the  bank  was  liable  were  £12,935,000 
upon  its  private  deposits,  and  on  the  other  hand,  the  bills  under 
discount  and  other  private  securities  amounted  to  £26,115,000. 
Under  these  circumstances  the  government  took  the  same  step  as 
had  been  taken  ten  years  before.     They  recommended  the  bank 
directors  to  take  upon   themselves  the   responsibility  of  issuing 
notes  upon  securities  beyond  the  limit   prescribed   by  the  bank 
charter  act;  and  they  undertook  to  call  Parliament  together,  and 
propose  a  bill  of  indemnity  for  this  breach  of  the  law.     The  bank 
did,  accordingly,  avail  itself  of  the  authority  of  the  Privy  Coun- 
cil to  the  extent  of  £2,000,000.     And  so  it  escaped  a  suspension 
of  its  business  by  a  virtual  suspension  of  specie  payments  under 
the  restriction  of  the  charter." 

These,  however,  were  exigencies  in  which  the  danger  was  im- 
minent and  impossible  of  postponement.  The  threatening  of  such 
a  catastrophe  is  not  unusuaL  When  it  puts  up  its  rate  of  discount 
or  interest  anywhere,  let  me  say  above  4  or  5  per  cent.,  it  is  done 
under  forecast  of  a  falling  sky.  In  such  seasons  of  a  strain  upon 
its  immediately  available  resources  it  is  driven  to  defend  itself 
against  the  necessity  of  calling  in  its  loans,  and  granting  extensions 
or  new  accommodations  to  the  business  community  by  oppressive 
rates.  I  need  to  cite  only  these  instances: — In  1848  its  discount 
rate  was  at  8  per  cent. ;  in  1854  at  5J ;  in  1856,  G  and  7  per  cent. ; 
in  1857,  7  to  10  per  cent.  ;  in  1858,  6,  7,  8,  9  and  10  per  cent.  ; 
in  1866,  drifting  into  suspension,  6,  7,  ft,  9,  and  10  per  cent.  In 
1857  it  changed  the  rate  eight  times;  and  in  1858  after  it  got 
relief,  it  changed  eleven  times  before  it  got  down  from  10  to  3  per 
cent.  ;  in  1861  it  fluttered  through  fourteen  changes  from  5  to  4 
and  thence  to  8  per  cent.  ;  in  18  54-5-0,  3  years,  it  gambolled  or 


BANKING. 


205 


gambled  from  3  to  10  per  cent,  through  the  intermediate  forty-six 
stages  of  ups  and  downs,  averaging  fifteen  changes  a  year. 

What  think  you  of  reeling  through  such  a  dance  of  death  as  this, 
and  of  its  disastrous  influence  upon  a  dependency  of  the  money 
interest  equal  to  100  millions  of  our  dollars,  with  all  its  incidents 
of  losses,  suspensions,  and  insolvencies  among  the  business  men  of 
the  great  metropolis  of  the  world's  trade  ? 

P.  If  such  disturbances  in  the  money  market,  depending  upon 
the  conduct  of  the  bank,  are  made  necessary  by  the  restriction  im- 
posed upon  it  by  its  charter,  the  fault  lies  there. 

T.  For  these  mischiefs  the  bank  is  responsible  to  the  extent  of 
its  influence  in  producing  them  ;  for  they  are  not  all  due  to,  or 
chargeable  upon,  the  pinching  restriction  of  its  charter. 

The  bank  is  a  corporation  of  stockholders,  and  their  interests 
greatly  modify  its  conduct.  As  they  profit  largely  by  the  tight- 
ness of  the  money  market,  it  is  allowable  to  infer  that  they  not 
only  welcome  high  rates  of  accommodation,  but  have  a  share  in 
provoking  and  continuing  them  beyond  the  necessity  imposed  by 
their  charter  obligations. 

D.  If  the  bank  raises  its  rates  as  a  defense  of  its  resources, 
does  it  not  diminish  its  profits  by  diminishing  its  business? 

T.  It  must  reduce  its  loans  and  discounts  to  one-fourth  of  the 
ordinary  amount  before  it  can  lose  anything  at  10  per  cent,  from 
its  profits  at  2|  per  cent.,  which,  by  the  way,  is  about  or  quite  the 
average  increase  of  investments  and  general  yield  of  money  in 
England,  and  is,  therefore,  the  normal  rate  of  interest.  In  fact, 
I  find  that  when  its  charge  was  2 J  per  cent.,  it  paid  its  stockholders 
7|  per  cent,  dividend  upon  the  par  price  of  its  stock.  When  it 
paid  them  9  per  cent.,  its  charge  was  3  J  per  cent.  In  1866  when 
the  business  revulsion  was  the  sorest,  it  charged  in  the  16  changes 
of  rates  of  that  year,  all  the  way  up  from  4|  to  10  per  cent,  dis- 
count, and  divided  a  profit  to  its  stockholders  of  11  per  cent.  So 
you  see  the  bank  gains  by  the  public  suffering,  as  doctors  do  in 
epidemics,  who  are  not  likely  to  pray  for  the  general  health,  but 
more  likely  to  prey  upon  its  disorders.  It  is  not  all  a  cautionary 
decrease  in  the  accommodation  of  the  public  imposed  by  its  condi- 
tion, for  in  1860  when  it  was  lending  and  discounting  at  3J  per 
cent,  its  loans  and  discounts  were  30J  millions  of  pounds  ;  but  in 


20G  POLITICAL  ECONOMY. 

1866  when  it  was  charging  6,  7,  8,  9,  and  10,  it  tightened  the 
screw  6  millions  in  one  of  the  quarters  of  that  year,  and  7  millions 
in  another  quarter  of  the  same  year,  and  raised  its  rates  from  6 
and  7  to  9  and  10  per  cent. 

D.  If  such  unsteadiness  of  a  thing  which  ought  to  have  the  steadi- 
ness of  a  standard,  but,  instead,  keeps  prices  and  prospects  damag- 
ing in  stimulation  and  depression  alike,  are  traceable  to  bank 
manipulations,  has  not  the  evil  induced  endeavors  at  a  remedy  ? 

T.  It  has  provoked  complaint  enough,  but  the  remedy  has  not 
been  found.  John  Bull  is  an  obstinate  creature,  and  like  Issachar — 
"  is  a  strong  ass,  he  bows  his  shoulders  to  bear,  and  becomes  a 
servant  unto  tribute"  (Genesis  xlix.  14).  When  he  once  gets  it 
into  his  head  that  an  institution  is  of  the  true-born  English  sort, 
he  will  bear  it  with  wondrous  endurance  and  with  a  patience  tbat 
is  almost  amiable,  rather  than  resort  to  a  "blasted"  novelty.  He 
believes  now  that  Peel's  contrivance  for  making  the  Bank  of  Eng- 
land-note convertible  on  demand  into  hard  cash,  even  at  the  risk 
of  every  other  service  which  it  ought  to  render,  is  the  very  per- 
fection of  financial  skill. — The  result  of  the  largest  experience  of 
the  ages  gone  by,  and  the  wisest  policy  of  her  savans  of  finance, 
and  notwithstanding  that  the  restriction-trap  in  the  bank's  charter 
has  to  be  let  up  every  time  for  which  it  was  provided  to  act,  and 
set  again  for  just  as  long  as  it  is  useless,  it  stands  there  upon  its 
accommodation  springs,  as  the  regulator  and  insurer  of  a  sound  con- 
vertible currency — when  nobody  wants  the  currency  converted — a 
safety  valve  that  must  not  play  when  its  designed  use  is  required, 

P.  Is  the  restriction  clause  of  the  charter  so  ridiculous  as  that  ? 
Is  the  science  of  currency  in  no  better  condition  than  that  in  the 
metropolis  of  the  world's  commerce :  and  is  it  so  absolutely  absurd  ? 

T.  It  would  be  ridiculous  if  it  were  not  more  mischievous  than 
preposterous. 

D.  There  must  be  some  indications  by  persons  of  authority 
suffering  these  errors  in  the  bank's  constitution,  that  support  your 
sweeping  condemnation. 

T.  A  royal  commission  was  moved  in  Parliament,  in  1866,  "  to 
investigate  the  causes  which  lead  to  the  long  continuance  of  a 
minimum  rate  of  discount  of  10  per  cent.,  in  which  the  large 
profits  of  the  Bank  of  England  were  alluded  to  as  supplying  one 


BANKING.  207 

"  reason  why  an  inquiry  should  be  made."  A  member  of  the 
House  of  Commons  and  a  director  of  the  bank  conceded  the 
charge  against  the  bank,  with  all  its  necessary  implications  con- 
tained in  the  resolution,  by  begging  the  House  to  remember  that, 
"  while  borrowers  suffered,  the  lenders  gained  ;  and  that,  as  both 
are  citizens  of  this  country,  the  gain,  as  well  as  the  loss,  would  be 
felt  throughout  the  empire."  Is  not  that  a  tid-bit  of  logic  worthy 
of  a  broker,  who  could  on  the  same  ground  justify  a  speculation  in 
the  weakness  and  folly  of  a  profligate  heir  expectant  who  sells  his 
post-obits  at  50  or  60  per  cent,  discount  ? 

D.  What  came  of  the  investigation  ? 

T.  I  do  not  know,  and  nobody  need  care.  The  charge  in  all 
its  force  was  conceded  by  an  official  of  the  bank,  just  because  it 
needed  no  other  proof  or  explanation  than  the  published  reports 
of  the  bank.  The  Money  Market  Revieiv  went  into  a  statistical 
confirmation,  which  I  have  used  as  to  the  particulars  of  the  affair. 
The  text-books  and  encyclopedias  of  British  authors  are  chary  of 
its  abuses  in  their  notices  of  the  great  regulator  of  their  currency ; 
but  they  admit  what,  indeed,  cannot  be  denied  or  explained  away, 
that  the  bank  has  been  frequently  on  the  verge  of  suspension,  but 
they  do  not  generally  or  frankly  expose  the  fact  that  it  as  often 
saves  itself  in  its  embarrassments  by  crushing  its  dependencies. 
Sir  Robert  Peel  and  his  advisers  intended  to  restrain  the  master 
bank  of  the  kingdom,  and,  through  it,  all  the  other  banks,  from 
making  over-issues  of  circulating  notes,  and  insuring  their  instant 
convertibility,  but  his  restriction  trap  never  did  prevent  inflation  ; 
and,  when  the  crisis  came  upon  the  great  regulator,  it  only  threw 
the  penalty  and  the  damage  upon  the  public.  We  have  seen  that 
the  corporation  makes  itself  not  only  exempt  from  the  revulsions 
which  it  helps  to  produce,  but  profits  largely  by  its  interference 
to  relieve  the  mischief  when  it  comes,  or  only  threatens  to  come. 

D.  If  such  evils  are  inherent  and  unavoidable  in  the  banking 
system,  is  there  no  help  for  it ;  no  more  promising  corrective  than 
the  experience  and  the  wisdom  of  the  money  metropolis  of  the 
world  has  devised  and  adopted  ? 

T.  We  shall  probably  see,  as  we  proceed  with  our  studies. 
And,  let  me  here  remark,  that  the  phrase,  "  money  metropolis  of 
the  world,"  meaning  a  power  held,  and  a  reputation  acquired  by 


208  POLITICAL  ECONOMY. 

its  centralization  and  domination,  calls  for  a  revolution  throughout 
the  domain  of  finance.  A  declaration  of  independence  is  wanted 
to  throw  off*  the  yoke  of  its  despotism,  and  a  setting  up  of  local 
governments  to  escape  colonial  enslavement. 

_P.  I  see,  by  the  reports,  that  there  are  in  the  United  Kingdom 
other  institutions,  with  an  aggregate  of  capital  and  deposits  more 
than  equal,  and  a  circulation  nearly  equal,  to  those  of  the  Bank 
of  England.  Do  they  not  materially  modify,  or,  to  any  extent, 
check  or  counteract  its  irregular  workings  ? 

AMERICAN  BANK  EXPERIENCES. 

T.  Scotland  has  a  greatly  better,  as  well  as  a  widely  different, 
system.  That  of  France  advantageously  compares  or  contrasts 
with  that  of  England  and  Wales.  And  our  present  national  bank 
policy  affords  a  critical  and  instructive  analysis  of  its  policy.  But 
Ave  must  defer  these  inciting  investigations  until  they  fall  more 
appropriately  into  the  plan  of  these  inquiries. 

P.  It  seems  to  me  that  the  varied  banking  experience  of  our 
own  country,  modified  and  guided  by  that  of  the  Old  World,  must 
open  up  the  whole  subject  to  the  light.  We  have  discussed  every- 
thing, and  tried  everything  that  belongs  to  the  subject ;  and,  not 
being  old  enough,  conservative  enough,  or  even  orthodox  enough, 
to  be  bigoted  in  our  views  of  anything  in  doctrine  or  in  practice, 
\\c  should  by  this  time  be  able  to  bring  the  machine,  its  springs, 
and  issues  into  view  ;  or,  in  failure  of  a  complete  and  profitable 
exploration,  we  must  have  exposed  our  incompetency,  which  suits 
these  conversations  just  as  well.  Let  us  try  this  self-examination, 
and,  if  possible,  avoid  the  self-glorification  that  too  often  attends 
the  business  of  heart-searching. 

T.  There  is  much  in  our  own  history  that  will  be  pertinent  in 
our  present  train  of  thought.     Let  us  see  some  of  these  points. 

Ever  before  the  late  Southern  rebellion,  under  some  differences 
of  forms  and  modifications  in  detail,  we  were  guided  in  our  bank 
theories  by  the  doctrines  and  practices  of  the  countries  which  we 
were  accustomed  to  call  our  mother  or  our  fatherland.  Affiliation 
in  this,  as  in  other  things,  clung  to  our  robustuous  political  sever- 
ance from  our  kindred  over  the  water.     We  tried  in  many  ways 


BANKING.  209 

to  provide  a  currency,  a  credit  currency,  in  the  form  of  circulating 
notes,  and  tried  as  earnestly  to  secure  their  redeemability.  "We 
tried,  once  or  twice,  to  give  the  currency  a  uniform  value  by  meas- 
ures promising  to  be  effectual,  but  generally  less,  even  less,  suc- 
cessfully, than  were  our  foreign  exemplars,  although  the  bank 
troubles  of  England,  in  some  exigencies,  might  keep  our  own  in 
countenance,  for  there  were  about  an  even  proportion  of  fraud  and 
folly  in  both  cases. 

P.  Is  it  possible  that  the  city  and  country  banks  of  England 
and  Wales  ever  went  into  such  confusion  as  ours  have  done  ? 

T.  A  bald  statement  of  the  facts  of  nearly  corresponding  dates 
will  show.  Mr.  Gallatin,  Secretary  of  the  Treasury,  reported  to 
Congress  that,  between  1st  January,  1811,  and  1st  January,  1830, 
165  of  our  banks  failed.  British  history  caps  this  report  with  240 
failures  between  1814  and  1816  ;  and,  from  1824  to  1830, 118, — 
an  aggregate  in  sixteen  years  of  858  against  our  165.  In  1841 
fifty-five  American  banks  broke  ;  between  1839  and  1 848  eighty- 
two  British  banks  succumbed,  of  which  forty-six  paid  nothing  to 
their  creditors,  and  the  average  dividend  of  the  remaining  thirty- 
six  was  less  than  35  per  cent.  It  would  be  curious  to  know  the 
relative  amounts  of  losses  following  these  failures,  but  it  is  ap- 
parent that  the  respective  results  under  a  generally  similar  system 
exhibit  the  common  vice  of  both. 

Twenty  or  thirty  of  our  local  legislatures,  without  any  bond  of 
union  or  concert  of  aims,  gave  us  our  wild-cat,  red-dog,  and  other 
irresponsible  paper-money  factories.  England's  one  Parliament 
allowed  the  catastrophes  that  followed  its  administration  of  the 
great  trust.  The  fault  of  each  looks  monstrous  till  its  fellow's 
fault  is  brought  to  match  it. 

D.  Fair  play,  in  this  comparison  of  systems,  requires  you  to 
note  the  fact  that  our  great  national,  the  United  States  Bank, 
which  was  claimed  to  be  the  regulator  of  the  American  banking; 
system  and  its  safeguard,  suspended,  resumed,  and  finally  broke 
irretrievably  between  1837  and  1841.  The  Bank  of  England  never 
went  so  far  as  that. 

T.  Stop  a  little.  In  1796,  when  the  debts  of  the  Bank  of  Eng- 
land stood  at  ,£15,903,110,  and  its  stock  of  coin  and  bullion  very 
little  exceeded  one  million,  an  order  of  Council  was  issued  author- 


210  POLITICAL  ECONOMY. 

izing  its  suspension,  and  forbidding  it  to  pay  its  debts;  that  is, 
to  pay  coin  on  its  outstanding  obligations,  on  the  public  ground 
that  such  coin  would  be  exported  to  foreign  countries,  but  really 
because  it  had  not  the  cash  on  hand  to  meet  its  engagements. 
This  failure,  or  postponement  of  payment,  would  have  been  bank- 
ruptcy in  an  individual,  but  it  was  not  insolvency,  only  suspension 
in  bank  dialect,  which  suspension  lasted  twenty-five  years — till 
1821.  In  1837  its  condition,  with  all  the  support  of  the  national 
exchequer,  which  was  then  largely  in  its  debt,  was  so  unmanage- 
able that  the  judges  of  its  chances  admit  that  it  was  saved  from 
actual  bankruptcy,  not  insolvency ,  by  the  aid  extended  to  it  by 
the  Bank  of  France.  And  what  can  be  said  for  its  banking  solv- 
ency in  1847,  1857,  and  1866,  when  the  Privy's  Council's  inter- 
vention saved  it  from  going  into  liquidation  ? 

But,  when  the  "  Bank  of  the  United  States"  fell  into  trouble, 
in  1837,  its  charter  by  Congress  was  taken  from  it;  the  public 
deposits  were  removed ;  the  President  (Jackson)  had  declared  it 
insolvent  and  corruptly  administered.  It  had  nothing  then  but  its 
cash  and  a  badly  damaged  reputation  to  sustain  it.  It  suspended, 
or  postponed  payment,  but  finally  redeemed  all  of  its  circulation, 
paid  all  its  depositors,  leaving  only  its  stockholders  to  suffer,  and 
had  a  trivial  surplus  of  about  two  dollars  per  share  to  divide  to 
them.  I  think,  all  things  considered,  the  Bank  of  England  does 
not  contrast  so  strongly  as  you  present  it.  Might  not  our  Regu- 
lator have  survived  under  the  fostering  care  of  the  Government, 
such  as  the  Bank  of  England  enjoyed,  if  it  had  been  so  helped  by 
every  contrivance  that  the  Ministry  could  invent  ?  Among  other 
things  its  paper  made  a  legal  tender ;  its  suspension  legalized, 
with  a  provision  that  the  bank  could  not  be  sued  for  non-payment 
of  its  notes  ;  and  that  no  person  could  be  held  to  special  bail  in 
any  action  against  which  he  had  tendered  in  payment  Bank  of 
England  notes. 

Under  favor  of  such  immunities  as  these  the  Bank  of  England 
was  able  to  make  dividends  of  7  per  cent,  from  1793  to  1806,  and 
10  per  cent,  per  annum  from  that  date  till  1816.  Its  total  divi- 
dends in  these  twenty-four  years  brought  to  the  stockholders  of 
this   suspended   bank   the   handsome   sum  of   .£23,051,952,   and 


BANKING.  211 

bonuses  beside  of  £6,694,380,— equal  together  to  $152,269,711, 
or  250  per  cent,  on  the  par  of  their  capital ! 

D.  In  view  of  such  results,  how  happens  it  that  they  never 
brought  irretrievable  ruin  upon  the  business  world?  You  will 
allow  me  to  judge  the  facts  of  history  by  their  issue. 

T.  There  is  a  vital  force  in  the  springs  of  the  business  organism 
that  survives  the  disasters  of  its  mismanagement.  You  have  seen 
healthy  and  able-bodied  people,  who  had  passed  through  the  con- 
vulsions of  teething,  the  eruption  of  measles,  the  struggles  of 
whooping-cough,  who  had  been  roasting  themselves  over  the 
kitchen  fire  in  June,  and  soothing  themselves  with  ice-water  in 
January,  and  all  the  while  subjected  to  the  curative  quackery  of 
drug  remedies,  yet  had  survived  all  these  disturbances  of  a  broken 
balance  in  their  vital  functions,  and,  despite  of  them,  had  grown 
into  strength  and  average  stature.  Would  you  question  the 
reality  of  their  diseases  because  their  bodies  had  not  broken  or 
gone  into  liquidation  ?  Rather  you  would  conclude  that  human 
nature  is  tough. 

P.  I  confess  that  all  along  the  revelation  of  the  evils  of  the 
banking  system,  so  long  in  vogue,  I  have  hesitated  to  accept  a 
systematic  pathology  of  the  patient's  disease,  which  looked  so  like 
a  coroner's  inquest  upon  the  dead  body  of  its  subject,  with  a  ver- 
dict of  suicide  committed  in  a  chronic  attack  of  mental  alienation. 
But  it  seems  that  the  common  life  of  communities  will,  however 
broken,  brokenly  live  on  ;  and  that  the  Promethean  fire  will  burn 
on  though  the  vulture  revenges  of  transgression  are  ever  tearing 
at  the  vitals  of  the  body  corporate. 

T.  At  their  best,  the  country  State  banks  of  our  system  were 
under  par  in  their  own  metropolitan  cities,  and  our  city  banks 
were  at  a  discount  in  their  neighboring  cities,  which  altogether 
amounted  to  a  heavier  tax  upon  the  people  than  even  their  fre- 
quent bankruptcies.  A  few  miles  from  home  their  notes  were 
aliens,  and  were  discounted  in  trade  in  proportion  to  their  dis- 
tance. They  were  under  no  common  control,  and  carried  no 
vouchers  of  their  solvency  with  them.  Their  notorious  uncer- 
tainty of  redemption  had  the  effect  of  generating  a  hard-money 
theory  of  currency  that  was  always  lying  in  wait  to  destroy  them. 
Their  reported  value  ran  up  and  down  at  the  will  of  speculators, 


-1-  POLITICAL  ECONOMY. 

half  a  dozen  times  a  day  in  the  auction  shops,  well  named  money 
markets.  Their  instability  of  exchange  value  put  up  prices  at  the 
expense  of  creditors  and  consumers,  and  then  again,  put  them 
down  to  the  damage  of  producers  and  debtors.  The  total  wrecks 
of  fortune  which  they  in  great  part  occasioned,  were  estimated  by 
Mr.  Gallatin  at  75  out  of  every  100  merchants  in  the  country. 
The  dealers  in  disaster  sometimes  piled  up  fortunes,  which  is  a 
bad  distribution  of  losses  and  profits  ;  unless  we  take  for  sound 
the  consolatory  doctrine  of  the  British  bank  director,  already 
quoted,  that  it  was  as  we  say,  "all  in  the  family,"  or  as  he  said, 
the  losers  and  gainers  are  all  citizens  of  a  common  country,  and 
find  compensation  in  that  sort  of  communal  interest  where  the 
devil  takes  the  hindmost  in  the  race  for  riches. 

OUR  NATIONAL  BANKING  SYSTEM. 

P.  As  we  cannot  get  out  of  the  credit  currency  system  without 
going  back  to  the  barter  of  the  barbarous  ages — which  is  quite 
impossible — there  must  be  in  possibility  some  available  remedy, 
for  whatever  is  necessary,  in  the  philosophical  meaning  of  the 
word. 

T.  So  far  as  a  sound  note  currency  is  a  necessary  part  of  the 
credit  system  of  exchange,  Mr.  Secretary  Chase  put  the  essentials 
into  this  form: — 

1st.  A  circulation  of  notes  bearing  a  common  impression  and 
authenticated  by  a  common  authority. 

2d.  The  redemption  of  the  notes  by  the  association  to  which 
they  may  be  delivered  for  issue. 

3d.  The  security  of  their  redemption  by  the  pledge  of  govern- 
ment stocks,  and  an  adequate  possession  of  specie. 

Or,  as  he  says,  "  In  other  words,  a  plan  for  the  preparation  and 
delivery  to  institutions  and  associations  of  notes  prepared  for 
circulation  under  national  direction,  and  secured  as  to  prompt 
convertibility  into  coin,  by  the  pledge  of  national  bonds,  and  by 
other  needful  regulations." 

The  existing  national  banks  are  organized  and  acting  in  exact 
conformity  with  these  requirements. 

I).  It  strikes  me  that  resting  the  security  of  the  circulating 


BANKING.  213 

notes  of  the  national  banks  upon  national  stocks,  is  very  like  the 
pledge  of  the  national  debt  held  by  the  issue  department  of  the 
Bank  of  England  for  the  ultimate  redemption  of  the  notes  put  into 
circulation  by  the  banking  department — the  Treasury  acting  as 
the  issue  department,  and  the  aggregate  of  the  national  banks 
acting  as  the  banking  department  of  the  Bank  of  England  does. 

T.  The  American  system  rests  the  total  of  the  security  for  the 
authorized  notes  in  national  bonds  and  redeems  them  at  the  Treas- 
ury upon  failure  by  the  banks  that  circulate  them.  Another  dif- 
ference, the  act  of  Congress  puts  no  limit,  fixed  and  inflexible, 
upon  the  amount  issuable.  Its  provisions  in  this  respect  are  not 
such  a  Procrustean  bed  as  that  upon  which  the  British  system 
stretches  and  mutilates  the  victims  bound  upon  it.  On  the  con- 
trary, the  pledge  of  security  is  exactly  coextensive  with  the 
liability  in  whatever  changes  it  may  undergo.  Never  more, 
never  less  than  fully  adequate.  The  constituting  act  provides 
that  whenever  more  currency  is  demanded  for  service  it  may  be 
afforded  ;  whenever  in  excess  in  the  locality  of  any  bank,  it  may 
return  unused  notes  and  withdraw  the  bonds  pledged  for  their 
redemption.  And  whenever  a  bank  suspends  payment  of  its  notes, 
the  redemption  is  shifted  from  its  counter  to  that  of  the  Treasury, 
and  an  equivalent  amount  of  its  deposited  bonds  are  cancelled. 
Thus  not  a  fraction  of  discount  is  suffered  by  the  holder,  because 
the  notes  then  become  a  promise  to  pay  by  the  Treasury,  and  the 
insolvency  of  the  bank  is  of  no  practical  import. 

P.  The  effect  upon  the  currency  so  authorized  and  secured  by 
the  provisions  of  the  act  is: — 

T.  The  establishment  of  one  form  of  a  sound  uniform  circulation 
throughout  the  country,  resting  upon  the  National  credit  combined 
with  private  capital,  subject  to  no  discount  whatever,  and  no  de- 
pendency upon  the  solvency  of  the  issuing  bank ;  effecting  a 
transition  from  a  currency  under  the  old  or  European  system, 
which  was  heterogeneous,  unequal,  and  unsafe,  to  one  uniform, 
equal,  and  safe;  and  providing  an  effectual  safeguard,  if  an  effect- 
ual safeguard  is  possible  against  depreciation,  and  affording  com- 
plete protection  against  losses  and  cost  of  exchanges. 

I).  So  far  so  good.  What  does  the  plan  do  for  the  protection 
of  depositors  ?  an  interest  quite  equal  to  that  of  the  note-holders. 


214  POLITICAL  ECONOMY. 

The  British  bank  plan  of  its  great  institution  has  an  equal  care  for 
deposits  and  circulation. 

T.  There  lurks  the  mischief  of  that  policy.  Our  banking  law 
is  not  at  all  indifferent  to  the  interests  of  the  depositors  and  con- 
tract creditors,  other  than  the  note-holders  ;  but  the  bargains  of 
depositors  are  with  the  corporations,  not  with  the  Government ; 
and,  accordingly,  while  the  Treasury  gives  due  supervision  to  the 
extent  of  its  responsibility  for  the  advantage  of  all  creditors,  it  does 
not  make  itself  a  surety  in  the  contracts  to  which  it  is  in  no  respect 
a  party.  And,  warned  by  experience,  it  takes  care  that  depositors 
shall  do  no  mischief  to  the  note-holders.  The  Government  has 
nothing  to  do  with  the  money  trade  of  the  corporations,  but  so  far 
as  it  gives  them  public  credit  or  invites  public  confidence,  it 
watches  over  the  conduct  of  the  banks.  Observe  that  a  National 
bank  is  not  an  office  of  the  United  States  Treasury.  A  charter 
of  the  Government  does  not  make  it  a  partner  with  the  stock- 
holders. It  is  the  currency  issued  to  the  company  and  employed 
by  it  for  which  the  Government  is  responsible  ;  just  as  it  has  noth- 
ing to  do  with  the  business  of  a  merchant  who  employs  the  coin 
issued  from  the  mint. 

To  exercise  this,  its  sole  duty  in  the  matter  of  the  circulating 
notes  required  in  the  common  business  of  the  community,  and  to 
recover  its  proper  control  over  the  currency,  Congress,  in  1864, 
drove  all  the  notes  of  the  State  banks  and  all  other  forms  of  paper 
circulation  out  of  use  by  imposing  a  tax  upon  them  which  they 
could  not  support  and  live.  The  grand  result  is,  that  since  that 
date  we  have  a  safe,  uniform  medium,  subject  to  no  disturbance  or 
inconvenience,  excejDt  those  which  may  fall  upon  the  Government 
credit.  If  the  National  Treasury  suspends  specie  payment  the 
banks  must ;  when  the  Treasury  resumes  the  banks  do  likewise  ; 
or  the  Treasury,  as  the  security  for  their  notes,  does  it  in  their 
stead.  Thus,  for  the  first  time  in  our  history,  Congress  assumed 
and  exercised  the  power  given  to  it  to  regulate  the  money  of  the 
country  and  to  fix  the  value  thereof  in  all  its  kinds. 

P.  You  believe  that  the  experience  of  a  16  years'  trial  has  ful- 
filled ail  that  the  National  banking  system  promised. 

T.  All,  and  so  far  as  at  present  advised,  all  that  any  banking 
system  can  accomplish. 


BANKING.  215 

D.  But  the  Government  charters  these  banks,  and  thus  gives 
the  public  at  least  a  constructive  guaranty  of  their  trustworthiness. 
Is  it  exactly  fair  to  do  nothing  for  creditors  other  than  the  note- 
holders ? 

T.  It  seems  almost  impossible  for  theories,  however  faulty  in 
practice,  to  get  rid  of  all  traces  of  error.  Something  of  this  is 
found  in  the  provision  of  the  bank  act  which  holds  the  stockholders 
liable  to  an  amount  equal  and  additional  to  the  amount  which  they 
subscribed  and  intended  to  invest  in  the  capital.  The  act  takes 
this  much  care  of  the  interests  of  the  depositors  and  other  general 
creditors,  and  by  the  right  and  duty  of  supervision  by  the  Comp- 
troller, guards  as  well  as  it  possibly  can,  without  otherwise  guar- 
anteeing their  general  business  trusts^  The  Comptroller,  by  his 
appointees  visits  and  inspects  the  affairs  of  the  banks,  at  his 
pleasure,  and  checks  their  irregularities.  For  any  grave  or  dan- 
gerous violation  of  their  obligations  he  appoints  receivers,  winds 
up  their  business,  and  distributes  their  assets  among  the  claimants. 
In  all  respects  the  Comptroller  intervenes  in  behoof  of  all  the 
bank's  customers  as  far  and  as  beneficially  as  can  be  required. 

I).  The  doubling  of  the  liability  of  the  shareholders  upon  the 
amount  of  their  investments  in  the  capital  stock  as  provided  for  in 
the  act,  does  not  meet  your  approbation.  Why  not  an  unlimited 
liability  of  those  who  through  their  own  officers  and  agents  control 
the  bank's  business  ?  It  is  a  sound  maxim  of  law  that  what  one 
does  by  another  he  does  by  himself. 

T.  In  the  case  of  bank  corporators  there  is  a  countervailing 
equity  to  be  considered  and  allowed.  Large  numbers  of  them 
are  really  incapable  of  controlling  the  business  of  the  association. 
Heirs  and  devisees  are  generally  in  this  predicament ;  indeed,  a 
majority  of  the  constituents  are  not  morally  liable  for  the  abuses 
of  a  majority  of  the  directors.  Besides,  the  equity  of  the  cred- 
itor is  clearly  limited  by  the  amount  of  the  investment  of  the 
shareholder,  and  the  stockholder  ought  not  to  be  required  to  risk 
more  than  he  has  staked.  But  without  this,  the  impolicy  of  an 
unlimited  liability  is  fatal  to  it :  it  deters  honest  and  prudent  peo- 
ple from  running  such  risks,  and  leaves  the  business  to  such  as 
will  venture  anything  in  a  lottery  of  chances,  intending  to  make 
the  most  of  it.     The  recent  explosion  of  the  Bank  of  Glasgow, 


210  POLITICAL  ECONOMY. 

(Scotland),  which  failed  through  the  fraudulent  mismanagement  of 
its  officers,  is  an  apt  illustration  :  A  widow  lady  was  saved  from  the 
loss  of  all  her  property  by  the  roguery  of  her  agent,  who,  instead 
of  purchasing  for  her  some  of  its  shares,  ran  away  with  the  pur- 
chase-money entrusted  to  him,  and  so  she  escaped  a  ruinous  liabil- 
ity for  all  the  defalcations  of  the  bank. 

I  am  not  describing  the  stockholders  of  the  national  banks,  nor 
of  any  others.  They  are  as  honest  as  other  people,  and  are  bet- 
ter watched.  Their  risks  are  mitigated  by  the  ascertained  amount, 
and  the  smallness  of  the  penalty  imposed  upon  their  misfortunes. 
I  am  trying  the  principle  in  issue.  Out  of  such  considerations  as 
these,  the  comparatively  recent  introduction  of  the  truer  princi- 
ple of  "  limited  liability "  into  the  joint  stock  corporations  of 
Europe  and  America  has  been  largely  adopted.  Everybody  deal- 
ing with  them  has  notice,  and  the  bargain  he  makes  and  the  trust 
he  reposes,  is  a  matter  of  contract,  governing  both  parties  con- 
cerned, and  is  equally  just  to  both. 

P.  The  "liabilities",  in  bank  reports  embrace  both  the  circula- 
tion and  the  deposits.  In  what  do  these  two  classes  of  debts  differ 
from  each  other  ? 

T.  They  are  alike  debts  payable  by  the  banks  on  demand,  and 
in  that  circumstance  lies  the  danger  of  the  proportioned  amounts. 
For  example :  the  outstanding  circulation  of  the  national  banks  in 
January,  1880,  was  over  322  millions,  at  the  same  time  the  de- 
posits amounted  to  766^  millions ;  something  more  than  2^  times 
greater.  Of  course  these  proportions  do  not  hold  uniformly. 
Under  the  old  State  banking  system  the  deposits  were  sometimes 
considerably  greater,  but  always  nearly  the  half  of  their  liabili- 
ties. Their  magnitude  is  a  more  or  less  important  element  in 
their  possibilities  of  mischief  to  the  note  holders. 

P.  Do  not  the  "deposits"  in  bank  statements  represent  the 
money  of  customers  actually  left  with  them,  and  thus  become 
resources  as  well  as  liabilities — liabilities  because  they  are  to  be 
repaid  to  the  depositors,  and  at  the  same  time  resources  for  that 
use. 

T.  They  are  debts,  and  for  the  most  part  are  nothing  but  debts 
of  the  borrowers  converted  into  credits.  The  resources  to  that 
extent  provided  to  meet  them  on  demand  must  be  looked  for  alone 


BANKING. 


217 


in  what  is  called  the  reserves.     This  point  will  appear  by  refer- 
ence to  the  condition  of  the  banks  in  the  city  of  New  York  on  1st 
October,  1878.     Their  deposits  are  given  at  213  millions.     What 
would  this  sum  in  money  be  doing  in  the  bank,  and  how  would  it 
get  there?     The  loans    and  discounts  were   then   196-  millions. 
Obviously,  the  loans  and  discounts  embraced  the  greater  part  of 
these  "  deposits."     These  loans  run,  probably,  thirty,  sixty,  and 
ninety  days,  and  were  not  certainly  available  to  meet  the  deposits 
on  demand.    Is  it  not  plain  that  a  panic  may  become  a  pressure  by 
a  run  of  the  depositors  ?     The  very  people  whose  claims  upon  the 
banks  are  only  their  own  debts  in  the  form  of  credits  on  the  books 
of  the  bank,  could  cause  their  suspension  of  prompt  payment. 
I).  When  the  sky  falls  we  may  catch  larks ! 
T.  The  financial  sky  often  lowers  and  sometimes  does  fall.     I 
am  speaking  of  the  possibilities — the  lurking  clangers  in  the  bank 
deposits.     A  squally  money  market  puts  the  banks  upon  the  ne- 
cessity  of   providing  for   possible   and   threatening  demands   by 
curtailing  their  accommodations  and  calling  in  the  maturing  loans 
to  their  customers.     They  loaned  their  credit  in  the  confidence 
that  it   would    be    available    quite    as    fully    as    their   liabilities 
Avould  be  likely  to  require  ;  but,  when  a  pressure  is  actual  or  only 
imminent,  they  are  nonplussed.      The  "  depositors,"  who  are  for 
the  most  part  borrowers,  are  also  disappointed  in  their  expecta- 
tions ;  they  must  withdraw  their  deposits.     The  banks,  in  turn, 
must  press  their  debtors  for  payment,  refuse  extensions  of  their 
loans  and  accomodations  to  the  fresh  applicants  for  relief,  and  when 
the  panic  runs  into  an  actual  pressure,  they  must  suspend,  however 
solvent  they  may  be.     In  point  of  fact,  the  circulating  notes  of 
the   banks  are  never  at  the  bottom  of  the  alarms  which  disturb 
them.     The  note  holders  know  little  or  nothing  of  the  condition 
of  things.     Those  who  are  in  the  position  to  know  it  best,  never 
have  more  of  these  notes  than  answer  for  pocket  money — they 
make  and  receive  payment  by  checks.     The  depositors  are  in  in- 
timate business  relations  with  the  banks,  and  are  always  in  the 
front  rank  when  a  run  is  made.     The  rear-guard  it  is  that  makes 
the  rout  but  do  not  institute  the  assault. 

It  helps  to  understand  the  force  of  a  panic,  that  while  some  in- 
stitutions cut  up  badly,  paying  all  the  way  from  50  cents  on  the 
15 


218  POLITICAL   ECONOMY. 

dollar  down  to  nearly  nothing  ;  others,  that  have  been  forced  to 
suspend,  that  is,  to  postpone  payment,  actually  discharge  their 
entire  indebtedness,  dollar  for  dollar. 

D.  Such  results  as  these  lie  in  wait,  as  necessary  incidents  of 
the  credit  system. 

T.  It  has  worse  tendencies,  and  a  worse  suite  of  attendants 
than  those  which  we  have  noticed.  Credit-money  in  the  form  of 
circulating  notes  and  extravagant  bank  loans  piled  up,  till  the 
structure  gets  too  broad  at  the  top  for  the  basis  to  support,  topples 
over  with  a  crash,  and  the  whole  community  suffers.  Our  old 
State  bank  system  is  marked  by  its  catastrophes  so  familiar  to  ex- 
perience that  men  began  to  look  for  them  as  they  did  for  the 
invasions  of  the  seventeen-year  locusts.  Opinion  had  got  into 
such  a  habit  of  anticipating  business  revulsions,  and  bank  suspen- 
sions, and  bankruptcies  every  year  after  the  close  of  the  Southern 
rebellion,  and  through  all  the  eight  years  to  which  the  revulsion 
was  postponed,  but  came  at  last  in  1873,  from  other  causes  than 
mismanagement  of  the  currency,  which  was  not  concerned  in  it,  or 
in  any  way  guilty  of  it. 

The  most  of  the  evil  of  a  bad  banking  system  is  in  the  unregu- 
lated expansion  of  its  credits,  by  which  prices,  both  orderly  and 
speculative,  are  raised  and  then  depressed,  so  that  creditor  and 
debtor,  producer  and  consumer,  are  losers,  and  the  sheriff  takes 
the  hindmost.  Business  for  a  while  is  at  a  stand-still ;  labor  is 
unemployed.  A  safety  switch  has  been  left  open ;  the  train  has 
left  the  track  ;  the  coroner's  verdict  finds  the  accident  inevitable  ; 
and  trips  on  time  are  resumed,  under  an  increase  of  speed,  till  the 
next  disaster  checks  the  train  with  a  shock  to  all  the  passengers 
who  have  not  jumped  while  the  engine  was  taking  in  combus- 
tibles for  the  next  inevitable  explosion  ! 

P.  Banks  have  often  been  found  contributing  to  extravagance 
of  expenditure  and  to  unsound  valuations  of  property.  They  have 
made  credit  in  its  various  forms  over-abundant,  and  its  promise  of 
continuance  temptingly  liberal,  so  that  speculators,  and  even  the 
more  prudent  of  the  community,  under  the  excitement  of  flush 
times,  are  caught,  with  the  natural  result  that  all  alike  are  crushed 
by  the  failure  of  their  reliances.  The  banks  and  money-dealers, 
holding  the  outlook  from  their  observatory,  anticipate  the  occulta- 


BANKING.  219 

tions  and  eclipses  among  the  sky-flyers,  and  are  ready  to  catch 
the  larks  when  the  airy  firmament  falls  upon  them. 

T.  We  must  not  throw  the  whole  blame  of  drunkenness  upon 
the  grog-sellers,  nor  too  severely  censure  them  for  kicking  the 
bloats,  they  have  helped  to  make,  into  the  street.  The  appetite  of 
the  customers  for  the  stimulus  is  concerned  as  well  as  the  thirst 
for  gain  of  the  vendors,  though  this  may  have  something  more  of 
cool  calculation  in  it. 

Credit,  and  a  representative  circulating  medium,  are  indis- 
pensable and  inevitable.  It  has  dangers,  as  liberty  has.  There 
is  security  against  its  risks  in  bondage  ;  and  the  more  absolute, 
the  nearer  it  approaches  to  social  death, — the  safer  it  is  from  the 
ills  of  life. 

D.  The  money  medium  being  the  instrument  of  commerce,  ought 
to  be  equal  in  quantity  to  its  intended  use  ;  and  that  part  of  it 
which  has  no  other  than  a  representative  value  ought  to  be  re- 
strained in  quantity  to  the  basis  which  it  personates,  or  to  what  a 
grammarian  would  call  its  antecedent,  for  it  is  by  analogy  a  pro- 
noun used  instead  of  a  substantive,  to  avoid  the  too  frequent  use 
of  the  same  thing.  Like  the  pronoun  it  may  be  used  any  number 
of  times  with  all  the  effect  of  its  antecedent ;  but,  just  as  it  would 
be  bad  grammar  to  make  a  plural  pronoun  represent  a  singular 
substantive  noun,  it  must  be  bad  finance  to  make  representative 
money  excel  in  quantity  the  basis  which  it  professes  to  rest  upon. 
T.  By  the  use  of  that  odd  analogy,  as  if  it  were  an  even  one, 
to  illustrate  an  assumed  evenness  in  the  things  compared,  you  help 
yourself  with  a  familiar  pattern  thought ;  but  how  do  you  parse 
the  proposition,  I  mean  how  do  you  find  the  concord  and  govern- 
ment of  the  parallel  ? 

D.  I  square  the  simile,  or  put  the  parable  on  all-fours  by  re- 
quiring the  representative  to  march  step  by  step  with  the  measure 
of  that  which  it  represents. 

T.  You  mean  in  your  form  of  expression  to  say  just  what  Adam 
Smith  says — I  quote  him :— "  The  total  volume  of  credit-money 
which  can  circulate  without  injury  in  a  country,  can  never  exceed 
the  value  of  the  gold  and  silver  money  of  which  it  takes  the  place, 
and  which,  if  commerce  remain  the  same,  would  circulate  there 
if  there  was  no  paper  money  in  circulation." 


220  POLITICAL   ECONOMY. 

D.  There  Smith  stands  upon  ground  that  cannot  be  shaken, 
for  an  image  cannot  be  true  which  is  not  an  exact  copy  of  its 
original. 

T.  To  sustain  Smith  you  assume  that  paper  money  is  only  a 
representative  of  what  I  suppose  you  would  call  the  real,  or  the 
coins  of  the  precious  metals.  But  credit-money  is  not  only  a 
representative  of  such  real  money,  it  is  also  a  substitute  for  non- 
existent cash,  and  as  such  may  have  any  proportions  that  are 
compatible  with  that  part  of  its  proper  functions.  Paper  money 
is  not  limited  to  representatives  of  the  precious  metals,  for  it 
represents  all  the  values  which  it  is  used  to  exchange,  and  to  the 
whole  extent  of  those  exchanges  ;  and  as  the  mass  of  exchanges 
vastly  exceeds  the  gold  and  silver  money  in  any  country,  credit 
money  is  and  must  be  used  in  commerce.  The  difference,  calling 
for  it  as  a  substitute  for  coin,  is  as  thousands  to  hundreds. 

Let  me  add  that  Smith's  doctrine  is  just  the  part  of  his  teach- 
ings in  which  he  is  most  in  error  ;  and  that  this  is  admitted  by  his 
most  earnest  admirers.  Yet,  curiously  enough,  it  is  just  in  this  one 
of  his  theories  that  he  is  most  followed  by  the  doctrinaires  of 
finance. 

I).  The  policy  that  has  all  along  prevailed  for  the  correction 
and  restraint  of  the  bank-note  circulation,  has  endeavored  by  limit- 
ing the  issue  to  the  resources  of  real  money  held  for  its  redemption, 
to  hold  it  sound  and  up  to  its  promises.  The  judgment  of  experts 
in  this  is  in  perfect  accordance  with  the  common-sense  or  popular 
view  of  the  subject. 

T.  With  the  results  we  have  seen — especially  in  the  history 
and  conduct  of  the  systematically  regulated  great  English  Regu- 
lator. The  dominant  aim  of  its  latest  charter  was  to  restrain  its 
issues  to  the  amount  of  its  solid  securities,  at  the  risk  and  even  at 
the  sacrifice  of  every  other  service  it  could  render  to  the  public. 
Its  governing  idea  is,  a  sound  paper  currency,  maintained  by  its 
instant  convertibility  into  coin.  But  we  have  seen  that  this  trap 
so  carefully  set  and  never  in  active  service  until  it  is  sprung,  is 
never  sprung  in  the  exigencies  that  call  it  into  service. 

The  doctrine  of  Smith  so  far  prevailed  over  all  teachings  of 
experience,  that  even  in  the  act  establishing  our  National  banking 
system  the  amount  of  notes  allowed  to  be  issued  was  at  first  arbi- 


BANKING.  221 

trarily  fixed  at  300  millions  of  dollars,  although  the  same  act  pro- 
vided for  adequate  security,  an  ample  deposit  of  United  States 
bonds.  Subsequently  the  uselessness  and  inconsistency  of  such 
arbitrary  limitation  was  felt,  and  the  traditionary  absurdity  was 
escaped  and  removed  by  a  supplementary  Act  of  Congress  (Janu- 
ary 14,  1875),  for  the  reason  that  it  is  not  a  law  of  the  subject, 
but  a  contrivance  of  theorists  of  the  money  system,  reflected  from 
an  erroneous  judgment  of  the  populace. 

D.  Even  over-abundant  caution  is  warranted  in  the  management 
of  a  matter  of  such  delicacy  and  of  so  great  public  interest. 

T.  But  there  is  no  use  in  pushing  the  gun  after  the  bullet  it  has 
discharged,  to  help  it  to  its  aim,  if  that  is  what  you  mean  by  the 
maxim  pro  cautela  majors. 

P.  Is  the  issue  of  National  bank  notes  unlimited  now  ? 

T.  It  is  not  limited  to  any  arbitrary  maximum  amount,  but  it  is 
limited  by  the  value  of  the  securities  deposited  in  the  Treasury 
for  its  redemption.  To  insure  conformity  of  the  supply  to  the 
demands  of  business  the  banks  can,  at  any  time,  increase  their 
quantity  of  notes  by  increasing  their  deposits  of  bonds,  or  they 
can  diminish  any  casual  excess  by  returning  the  notes  which  they 
hold  inactive,  and  lifting  the  bonds  pledged  for  them.  So  the 
system  in  operation  is  relieved  from  guessing  how  much  of  them 
may  be  required  for  public  accommodation.  In  this  respect  the 
Bank  of  England  charter  compares  with  our  circulation  policy  as 
the  lock-jaw  compares  with  a  corporation  having  its  sinews  free 
alike  in  action  and  in  repose.  Our  Congress,  after  much  unavail- 
ing eifort  to  manage  the  apportioned  distribution  of  the  currency 
geographically  under  the  restriction  of  the  original  act  (February 
25,  1863),  in  despair  of  success  revoked  the  limitation  and  left 
the  supply  and  the  distribution  to  arrange  themselves  in  freedom. 

BANK  OF  FRANCE. 

P.  It  is  understood  that  the  Bank  of  France  has,  with  permis- 
sion of  the  Government,  issued  its  notes  without  regard  to  any 
fixed  limit,  and,  in  fact,  against  all  precedent,  observing.no  ratio 
to  its  resources  for  their  redemption  ;  and  yet  has  maintained 
them  without  depreciation  through  the  whole  period  of  the  Franco- 
Prussian  war,  the  war  with  the  Commune,  the  strain  of  the  German 


222  POLITICAL   ECONOMY. 

indemnity,  and  of  the  home  expenditure  ;  and,  through  all,  and 
over  all,  has  escaped  the  dangers  of  a  wide  and  wild  departure 
from  the  accepted  theory  of  the  banking  economy. 

T.  M.  Bonnet,  whose  history  of  the  finances  of  France,  in  the 
time  of  its  terrible  trials,  manifests  his  competency  as  a  reporter 
and  critic,  concludes  his  examination  with — "  The  financial  phe- 
nomena of  French  experience  apparently  reverses  the  economical 
and  financial  principles  which  the  best  authorities  on  the  subject 
have  hitherto  labored  to  establish  ;"  and  he  cries  out  in  surprise, 
but  under  conviction  which  the  accomplished  facts  force  upon  him  : 
"What  has  happened  to  produce  so  great  a  change  in  the  course 
of  things  ?  Is  financial  science  assuming  a  new  aspect,  and  prov- 
ing that  we  have  been  all  wrong  in  fearing  irredeemable  paper  ? 
Are  we  to  learn  that  ideas  have  made  progress,  and  that  we  are 
on  the  eve  of  realizing  that  famous  'wagon-way'  through  the 
air  spoken  of  by  Adam  Smith — a  circulation  without  a  metallic 
base  ?" 

Now,  if  I  were  allowed  to  answer,  I  should  be  bold  enough  to 
say,  things  will  come  about,  though  Hume,  Locke,  Smith,  Say, 
Ricardo,  Mill,  and  the  rest  of  them,  make  no  arrangement  for  the 
departures  of  Providence  from  the  principles  and  procedure  of 
Political  Economy. 

The  author,  Bonnet,  is  explicit  in  saying,  against  his  prepos- 
sessions, "  No  one,  unless  an  advocate  of  irredeemable  paper  cur- 
rency (pure  fiat  money),  would  have  ventured  to  maintain  that 
we  could  issue  bank  notes  in  large  quantities  Avithout  depreciation 
to  meet  the  exigencies  of  a  public  debt,  not  itself  redeemable  until 
after  a  considerable  time.  This,  nevertheless,  has  happened." 
His  surprise  at  this  issue  of  the  experiment  might  fall  less  heavily 
upon  those  who,  very  far  from  being  advocates  of  fiat  money, 
should  ask,  "Are  we  forbidden,  by  any  sound  principle,  to  dis- 
count the  future  on  the  ground  that  all  labor  and  all  enterprise  are 
based  upon  expectation  ?"  We  sow  that  we  may  reap.  Railroads, 
factories,  all  permanent  improvements  and  investments,  discount 
the  future. 

D.  The  example  of  France  will  hardly  affect  the  banking  sys- 
tem, so  long  existing  and  still  prevailing  everywhere  else,  I  be- 
lieve.    It  will  be  hard  to  tear  up  its  deep-seated  foundation,  and 


BANKING.  223 

set  it  ballooning  in  the  air.  It  will  feel  safest  upon  the  terra  firma 
of  an  adequate  reserve  in  ordinary  times,  and  take  the  storms  when 
they  arise  ;  or,  if  I  may  shift  the  figure  to  a  less  stable  element, 
shorten  sail  until  the  tempest  abates. 

T.  That  old  system,  which  depends  so  much  upon  its  anchors, 
requires  very  fair  weather  for  safe  sailing.  In  1866  the  failure 
of  one  large  house,  that  of  Overend,  Gurney  &  Co.,  sufficed  to 
bring  the  whole  banking  system  of  England  into  danger.  The 
panic  was  so  great  that  the  day  of  the  explosion  is  called  "Black 
Friday."  Discount  at  the  great  bank  went  up  to  10  per  cent. ; 
there  were  no  cheques  in  circulation ;  business  involving  confidence 
came  to  a  halt ;  the  Privy  Council  authorized  the  Bank  of  Eng- 
land to  suspend  specie  payment ;  that  is,  to  issue  notes  for  general 
relief  in  any  required  excess  beyond  the  reserve  required  by  the 
charter.  The  orthodox  basis  of  the  bank  note  was  abandoned,  as 
it  always  must  be  in  the  conditions  in  which  any  use  of  it  is  re- 
quired; and,  wonderful  to  tell,  England  exactly  followed  the  ex- 
ample of  France,  and  thereby  extricated  herself  from  the  toils  of 
her  time-honored  policy  of  security. 

But,  flash  the  light  of  a  lamp  upon  a  benighted  traveller,  he 
first  shuts  his  eyes  upon  the  intolerable  glare,  then  opens  them 
with  a  snap,  and  so  gets  out  of  the  woods  ;  but,  missing  the  old 
land-marks  of  the  highway,  he  gropes  about  in  his  blindness  till 
he  finds  again  the  beaten  track,  and  travels  it  as  before,  by  the 
guidance  of  his  memory.  England  is  still  walking  in  her  own 
shadow,  with  "  the  light  of  other  days  around  her." 

D.  Precedents  seem  to  pass  for  little  or  nothing  with  you. 
T.  Precedents  !  I  value  them  as  much  as  Bacon  valued  observa- 
tion and  experiment  in  discovery,  but  not  on  account  of  their  age. 
Our  forefathers  are  entitled  to  no  more  honor  from  us  than  we 
may  expect  from  our  successors.  The  best  tribute  we  can  pay  to 
the  past  is  to  keep  moving.  There  is  no  reason  why  we  should 
not  improve  our  inheritance. 

P.  I  should  like  to  hear  as  much  of  that  French  test  of  the  old- 
time  theory  of  banking  as  may  avail  for  the  better  understanding 
of  the  question  at  issue.  I  should  like  to  know  exactly  why  the 
story  is  not  of  "the  trials,"  rather  than  as  it  is  constantly  called 
"  the  example  of  France." 


224  POLITICAL   ECONOMY. 

T.  A  very  brief  presentment  of  the  instructive  points  of  this 
strange  eventful  history  is  all  that  I  can  promise : 

On  the  20th  of  July,  1870,  the  day  after  the  declaration  of  war 
against  Prussia,  the  circulation  of  the  Bank  of  France  (which  has 
the  exclusive  right  of  issuing  notes  for  the  kingdom,  empire,  or 
republic,  as  it  may  happen  to  be)  was  1255  millions  of  francs — 
S  251, 000, 000 — its  cash,  probably  including  cash  items,  was  1155 
millions,  equal  to  91  per  cent,  of  its  note  circulation.  This  large 
reserve  made  it,  in  the  estimation  of  the  London  Economist, 
"  stronger  and  sounder  than  any  other  in  the  world."  That  is 
the  way  of  measuring  the  strength  of  a  bank  by  the  British  theo- 
rists. It  was  strong  because  it  had  91  per  cent,  of  basis  for  its 
circulation.  If  it  had  had  only  45  per  cent,  it  would  have  been 
a  fraction  less  than  half  as  strong,  of  course  ;  but  it  proved  itself 
strongest  afterward  when  its  reserve  had  fallen  to  24  per  cent.  ! 

D.  I  should  like  to  see  the  supporting  proof  of  such  a  paradox 
as  that.  • 

T.  A  paradox  only  if  your  orthodox  is  true,  otherwise  not. 
This  is  a  doctrine  then  on  trial,  and  still  awaiting  settlement. 
Hear  the  evidence  : 

The  bank  was  founded  in  the  year  1800.  After  1806  it  had 
the  exclusive  right  to  issue  currency  in  the  city  of  Paris,  and 
since  1857,  it  has  the  same  monopoly  for  all  France.  It  exercises 
this  power  through  about  90  branches  in  the  departments.  In 
1848,  in  the  revolution  of  that  year,  it  was  authorized  to  suspend 
specie  payments,  and  its  notes  were  made  legal  tender.  In  1857 
when  the  great  financial  crisis  occurred  in  England  and  the  United 
States,  the  Regents  applied  to  the  Emperor  for  leave  to  suspend, 
but  permission  was  refused.  The  national  government,  by  its  rep- 
resentation in  the  board  of  directors,  is  absolute  in  its  manage- 
ment.  It  is  not  a  fiscal  agent  of  the  government,  as  the  Bank  of 
England  is,  yet  its  conduct  is  controlled,  not  by  arbitrary  provisions 
of  its  charter,  but  by  the  discretion  of  national  authority  inter- 
posed and  exercised  as  occasion  requires  ;  that  is,  the  craft  is 
sailed  in  stormy  weather,  not  by  the  ordinary  and  orderly  nav- 
igation chart,  but  by  the  direction  of  the  captain.  An  instance 
of  imperial  intervention  in  restraint  of  its  exactions  from  the  pub- 
lic for  its  own  profit,  illustrates  the  government  control :    In  I860 


BANKING.  225 

the  bank  held  100  million  dollars  in  gold,  and  325  million  in  sil- 
ver. Gold  at  that  time  was  at  nearly  10  per  cent,  premium  over 
silver.  The  standard  being  15J  to  1  of  the  respective  metals, 
both  legal  tender  at  that  ratio.  The  bank  had  the  opportunity 
of  realizing  ten  millions  profit  by  selling  its  gold  for  silver,  and 
paying  its  debts  in  the  cheaper  metal.  Louis  Napoleon  absolutely 
prohibited  the  proposed  speculation.  The  morals  of  merchandiz- 
ing would  have  warranted  the  transaction,  but  Paris  would 
probably  have  gone  into  revolution  if  it  had  been  permitted. 
Charters  are  the  scriptures  of  corporations,  to  be  sure,  but 
the  construction  often  dodges  the  legislative  intention.  (T  once 
heard  a  stage  proprietor  say  that  he  could  drive  a  coach  and 
four  through  any  charter.)  France,  owing  to  the  vast  quantity  of 
silver  money  in  the  hands  and  hoards  of  the  people,  is  compelled 
to  maintain  its  legal  tender  equality  under  the  rule  of  bi-metallism, 
just  as  we  are  making  88  cents  worth  of  bullion  pass  for  a  dollar 
— a  policy  which  is  mitigated  by  making  the  coin  non-exportable, 
in  our  case,  and  is  relieved  in  France  by  limiting  the  coinage  to 
something  near  the  necessity  for  small  change,  or  payments  in  the 
smaller  transactions  of  business. 

D.  This  compensation  indirectly  raises  our  silver  dollar-pieces 
to  the  rank  of  the  paper  dollar  in  service  and  worth. 

T.  Not  exactly.  The  difference  of  its  avoirdupois,  and  some 
other  things  are  against  its  pretensions.  It  is  a  forced  currency, 
and  that  takes  some  of  the  shine  out  of  it.  It  does  not  travel  on 
its  own  muscle.  Its  crutch  somewhat  affects  the  grace  of  its  gait. 
But  to  our  history  : 

France  performs  political  revolution,  in  tragedy,  comedy,  and 
farce,  as  often  as  Paris  has  a  grievance,  or  wants  one,  for  recrea- 
tion ;  but  it  manages  through  all  its  irruptions,  dissolutions,  and 
reconstructions,  to  keep  its  finances,  national  and  individual,  in 
serviceable  order.  In  1870  the  body  politic  was  shaken  to  pieces 
by  foreign  and  domestic  war  to  an  extreme  that  to  any  other  peo- 
ple would  have  been  ruin  ;  but  it  is  said  that  eels  bear  flaying 
alive  all  the  better  for  being  used  to  it.  Within  ten  months  after 
the  19th  of  July,  1870,  her  Emperor  was  captured  and  deposed  ; 
her  armies  were  everywhere  defeated  ;  her  capital  was  seized, 
first  by  a  victorious  mob,  and  afterwards  by  a  foreign  enemy;  her 
strongholds  were  in  hostile  occupancy  ;  her  territory  was  dimin- 


226  POLITICAL   ECONOMY. 

ished,  and  her  debt  and  expenditure  were  increased  nearly  2000 
millions  of  dollars.  In  this  period  of  unprecedented  national  dis- 
asters, the  bank  advanced  to  the  government  at  intervals  600  mil- 
lions of  dollars,  and  was  as  sound  and  s.trong  at  the  very  climax 
of  this  scene  of  desolation  as  at  any  time  of  peace  and  general 
prosperity  in  its  whole  history.  At  the  onset  of  its  crucial  trials 
its  great  metallic  reserve  was  the  admiration  of  the  disciples  of 
the  orthodox  banking  faith.  It  became  their  astonishment  when  it 
let  go  that  anchor,  hoisted  all  sail  and  committed  its  fortunes  to  the 
winds  and  waves  of  a  tempestuous  sea  of  credit,  in  which  it  was 
theoretically  shown  that  no  unballasted  craft  could  possibly  live  ; 
yet  after  the  storm  subsided,  it  came  into  port  all  taut,  its  hull 
sound,  its  rigging  all  standing,  and  its  flag  floating  in  the  breeze, 
not  a  fold  torn,  not  a  wrinkle  in  its  display.  In  brief,  the  bank's 
circulation,  which  was  251  millions  of  dollars  the  day  before  the 
declaration  of  the  Franco-Prussian  war,  with  91  per  cent,  metallic 
reserve,  was  in  June,  1871,  at  the  end  of  the  venture,  or  adven- 
ture, one  month  after  the  treaty  of  peace,  573  millions,  with  a 
reserve  of  23.8  per  cent.  And,  wonderful  to  tell,  on  the  9th  of 
November,  1876,  its  outstanding  notes  stood  at  491  millions,  with 
a  reserve  of  84|  per  cent.! 

P.  Do  I  understand  you  to  say  that  through  all  this  inflation  it 
kept  its  notes  at  the  par  of  gold  and  silver  ? 

T.  No  ;  but  the  depreciation  was  so  trifling  and  for  so  brief  a 
period  that  it  is  not  worth  mentioning.  The  only  time  that  its 
notes  fell  below  par  was  in  November,  1871,  six  months  after  the 
close  of  the  war  with  Prussia,  when  the  first  instalment  of  the 
indemnity  was  paid  to  Prussia,  and  then  the  highest  rate  was  only 
2h  per  cent.  Now  mark  this  other  surprise — when  its  notes  were 
at  their  highest  rate  of  discount  the  amount  in  circulation  was  460 
million  dollars,  and  by  the  end  of  January,  three  months  after  the 
first  date  of  their  depreciation,  the  circulation  had  increased  to 
490  millions,  and  the  discount  had  disappeared.  "  At  a  single 
step,"  a  French  annotator  feels  at  liberty  to  say,  "  we  issued  1800 
million  francs  of  new  notes,  and  this  legal  tender  kept  itself  at 
par,  with  a  parenthesis  of  2J  per  cent,  at  its  climax  in  1871,  which 
may  be  omitted  without  injury  to  the  sense  of  the  story."  The 
figures  are — circulation  on  20th  July,  1870,  1255  million  francs  ; 


BANKING.  227 

on  the  31st  October,  1873,  3071  millions;  increase,  1816  millions; 
time,  3  years  3^  months. 

D.  Yon  have  said  that  banks  are  safe  when  their  reserve  is  equal 
to  25  per  cent,  of  their  .circulation,  even  in  the  principal  cities 
where  metallic  money  is  often  demanded  for  foreign  and  domestic 
account.  And  you  report  24  per  cent,  of  redemption  fund  in  the 
Bank  of  France  at  the  time  of  its  largest  issue.  It  had  then  an 
ample  working  reserve  to  sustain  its  circulation. 

T.  Safe  against  the  home  demand  for  specie,  but  when  the  bal- 
ance of  trade  is  against  a  country,  as  it  was  against  France  in 
1871,  when  the  foreign  demand  for  the  "money  of  the  world" 
put  its  bank  notes  at  a  discount,  self-protection  drove  its  commer- 
cial legislation  into  measures  of  defense.  After  the  balance 
of  foreign  trade  in  commodities  was  turned  in  favor  of  France,  and 
the  domestic  credit  system  was  freed  from  disturbance,  the  bank 
paid  and  received  gold  and  silver  just  as  freely  as  if  it  had  not 
been  legally  released  from  that  duty,  and  it  could  have  clone  so  if 
its  notes  had  not  been  made  a  legal  tender.  We  find  that  its  specie 
increased  from  731  millions  of  francs  in  October,  1873,  when  its 
reserve  was  at  the  lowest,  to  2163|  millions  in  November,  1876. 
The  bank  being  all  this  time  in  what  is  called  suspension,  that  is, 
released  from  the  legal  obligation  to  pay  coin  on  demand.  It  was 
not  bound  to  resume  specie  payment  until  1st  January,  1878.  In 
fact  and  eifect  it  did  resume  early  in  1871,  or  as  soon  as  the 
country  was  relieved  from  the  foreign  drain  of  an  adverse  balance 
of  international  trade.  Such  was  its  condition  and  credit  that  in 
March,  1876,  when  it  held  a  redemption  fund  of  62.8  per  cent,  of 
all  liabilities  in  cash,  its  shares  were  selling  in  England  at  3690 
francs,  the  par  being  1000.  That  year  it  divided  to  its  share- 
holders 20  per  cent,  upon  the  par  price  of  its  shares,  which  was 
equal  to  5.42  per  cent,  of  their  market  price. 

P.  How  were  the  finances  of  the  nation  2-ettin<z;  aloni>;  while 
those  of  the  bank  were  so  prosperous  ? 

T.  Famously.  As  early  as  the  end  of  1874  the  Financial  Sec- 
retary reported  that  the  whole  1000  millions  of  dollars  borrowed 
in  the  loans  of  1871  and  1872  had  been  reabsorbed  by  French 
capital.  So  the  credit  of  the  Government  kept  step  with  that  of 
the  bank.     The  question  called  up  by  this  story  is,  I  think,  an- 


ZZQ  POLITICAL    ECONOMY. 

swered  correctly  by  Lord  Macaulay  in  his  treatment  of  the  enor- 
mous debt  of  Great  Britain — he  says: — "There  is  not  an  exact 
analogy  between  the  case  of  an  individual  who  is  in  debt  to  another 
individual,  and  the  case  of  a  society  which  is  in  debt  to  a  part  of 
itself."  In  such  case,  when  the  debt  is  held  at  home,  its  interest 
retained  is  capital  in  production  ;  labor  has  the  benefit  of  its  earn- 
ings, provided,  as  in  the  policy  promptly  adopted  by  France  in 
her  great  necessity,  its  profits  and  its  wages-paying  power  are  not 
surrendered  to  foreign  industries. 

D.  I  suppose  we  are  to  have  the  doctrine  of  tariff  protection 
next. 

T.  I  suppose  that  you  felt  an  inkling  of  it  in  the  simple  state- 
ment that  France  could  not  maintain  her  irredeemable  currency 
and  keep  her  home  money  good  for  all  uses,  when  it  was  necessary 
to  her  very  existence,  while  she  was  allowing  her  domestic  indus- 
tries to  suffer,  and  was  fostering  that  of  foreigners  who  contributed 
nothing  to  the  provision  for  her  necessary  expenditure  ;  and,  I 
suppose,  you  perceived  that  when  France  was  under  no  necessity 
to  export  her  "  money  of  the  world,"  she  found  that  her  own  was 
every  way  sufficient  for  her.  In  other  words,  that  she  protected 
her  life  by  protecting  her  labor  and  productive  industries,  under 
compulsion  of  the  demand  for  some  contribution  toward  her  ex- 
penses from  those  who  enjoyed  her  markets.  Then  France  found 
that  the  reciprocity  treaty  with  England  had  delegated  too  much 
of  her  proper  sovereignty  to  the  foreigner  to  comport  with  her 
domestic  welfare,  and  that  she  must  bar  out  the  tramps  who  were 
trespassing  upon  her  domain.  But,  let  us  not  cross  the  bridge 
before  we  come  to  it.  Let  me  say,  however,  by  way  of  notice, 
that  I  believe  the  whole  farago  of  adequate  metallic  reserve 
and  legal  tender  might  be  left  to  the  doctrinaires  who  occupy  them- 
selves with  gnawing  those  old  bones,  if  only  international  trade 
were  effectively  deprived  of  its  mischiefs.  Business  and  currency 
within  national  boundaries  and  in  and  under  national  order  can 
take  care  of  themselves. 

P.  I  understand  that  the  Bank  of  France,  in  the  midst  of  the 
greatest  strain  upon  its  resources,  when  fear  must  have  taken  the 
place  of  faith  and  hope,  instead  of  contracting  its  issues,  as  the 
solid  basis  system  requires,  to  the  measure  of  its  reserves,  actually 


BANKING.  229 

enlarged  them  in  immense  disproportion  to  the  fund  which  it  held 
for  their  redemption  ;  and  that,  nevertheless,  the  notes  in  such 
immense  excess  maintained  themselves  at  the  par  of  gold.  Can 
an  irredeemable  currency  possess  in  itself  such  potency  ;  or  in 
what  extrinsic  aid  may  we  find  the  required  power  ? 

T.  That  note  circulation  did  not  maintain  itself  at  par  when  the 
balance  of  foreign  trade  requiring  the  export  of  gold  existed;  and, 
if  the  adverse  balance  had  long  continued,  the  currency  must  have 
depreciated,  as  it  has  done  in  so  many  other  cases,  to  50,  or  even 
a  heavier  discount.  Nothing  less  than  dollar  for  dollar  in  metallic 
reserve  will  keep  a  circulating  note  currency  afloat  under  a  gen- 
eral run  for  redemption.  All  experience  proves  that  25  per  cent, 
of  coin  is  more  than  is  required  to  meet  the  current  necessities  of 
home  business,  when  confidence  prevails,  for  opinion  and  sentiment 
are  potential  in  money  matters  as  much  as  in  any  department  of 
human  affairs.  In  times  of  political  revolution  it  is  treason  to 
doubt  the  fortunes  of  the  republic  ;  and  the  public  faith  never 
fails  when  it  is  most  needed.  After  the  armed  foreign  invasion  of 
France  was  withdrawn,  and  the  commercial  invasion  had  been 
barred  out,  the  reserve  of  2-1  per  cent,  was  found  more  than  ade- 
quate by  the  bank.  There  is  no  mystery  in  the  portentous  phe- 
nomena of  this  history,  except  the  mystery  of  faith  resting  upon 
an  assured  defence  against  the  hostility  of  foreign  trade. 

P.  When  I  interrupted  you  for  the  purpose  of  getting  a  more 
familiar  command  of  the  principles  of  the  bank  system,  you  were 
about  to  enter  upon  the  economic  rules  which  govern  the  paper 
money  supply. 

T.  All  departments  of  knowledge  that  relate  to  practice  are 
two-sided.  They  divide  themselves  in  study  into  theory  and  art — 
a  directing  spirit  and  a  working  body.  They  are  distinctly  one. 
The  force  and  use  of  the  one  is  manifested  through  the  other,  and 
they  test  each  other.  The  banking  system  is  the  machinerv  of  its 
principles.  The  circulating  note  is  the  common  instrument  of  the 
common  credit  system.  The  note,  unlike  the  check,  draft,  or  bill 
of  exchange,  serves  in  the  commonest,  broadest,  and  most  essen- 
tial business  of  the  people.  It  is  their  money,  and  is  mainly  used 
in  their  retail  transactions.  The  wholesale  credit  money  of  capi- 
talists has  not  the  same  use,  and  does  not  need  the  same  medium. 


230  POLITICAL    ECONOMY. 

The  circulating  note  is  ever  on  the  wing.  It  has  no  leisure  to  earn 
interest  for  the  holder.  Its  travels  and  adventures  would  be  such 
a  history  of  the  common  life  of  society  as  never  yet  was  written, 
or  ever  will  be.  During  the  eighteen  years  following  the  suspen- 
sion of  specie  payments  in  the  United  States,  which  commenced  in 
December,  1801,  in  connection  with  an  equal  amount  of  Treasury 
notes,  or  greenbacks,  of  substantially  the  like  character  and  use, 
these  notes  were  the  currency  of  the  country.  Gold  and  silver 
money  being  demonetized,  and  at  a  very  high  rate  of  premium, 
were  driven  out  of  the  common  service.  Here  we  have  the  vast 
business  of  a  nation,  growing  from  thirty-two  to  over  forty-five 
millions  of  people,  and  with  a  capital  wealth  rising  from  less  than 
twenty  to  above  forty  millions,  measured  by  the  money  in  use  ;  a 
war  expenditure  of  quite  five  thousand  millions  above  that  of  any 
other  five  years  of  peace,  and  carrying  on  besides  permanent 
internal  improvements  of  unparalleled  outlay, — all  effected  by  the 
agency  of  a  paper  money  usually  styled  irredeemable,  and  ac- 
tually inconvertible  at  its  face  value  into  the  "  money  of  the  world." 
This  inventory  would  be  complete  only  if  we  could  put  into  it  the 
items  of  its  service  as  a  medium  for  effecting  the  exchanges  of 
commodities  and  services  of  a  people  who  in  the  time  lived  through 
the  ordinary  experiences  of  a  hundred  in  a  score  of  years. 

Is  there  anything  in  this  story,  or  is  there  anything  yet  to  come 
of  it,  to  keep  in  countenance  the  financial  disesteem  of  theorists 
for  the  circulating  note  ?  It  had  not  the  cosmopolitan  reputation 
of  a  "  world's  money,"  but  it  did  gallantly  earn  and  vindicate  the 
claim  to  the  worthier  title  of  American  money.  It  never  deserted 
its  own  standard,  or  went  into  foreign  service.  It  bore  the  stripes 
of  the  conflict,  and  kept  burning  with  its  stars  till  its  victory  wTas 
achieved. 

P.  Yes,  yes,  they  redeemed  the  nation  while  yet  unable  to 
redeem  themselves.  How  long  did  they  stand,  and  how  low  did 
they  sink  in  the  broker's  scale  of  equivalents  ? 

T.  They  went  down  from  par  in  December,  1861,  to  285  for 
100  gold,  in  July,  1864,  and  recovered  their  exchange  equality 
before  the  1st  January,  187(J.  But  in  all  this  period  of  eighteen 
years,  except  in  the  payment  of  old  debts,  and  in  the  value  of 
salaries   and  annuities,  they  balanced  relative  values   in   current 


BANKING.  231 

exchanges  as  well  as  gold  could  have  done.  They  raised  market 
prices  to  a  substantial  equivalence  ;  that  is,  they  took  care  of  the 
live  business  of  the  period,  leaving  the  dead  to  take  care  of  itself. 
Limited,  under  the  adequate  reserve  doctrine,  at  the  rate  of  one 
for  one,  they  would  have  been  as  miserably  scant  in  supply  as  the 
"precious"  must  have  been  ;  yet,  judged  even  by  the  arbitrary 
standard,  they  eventually  fulfilled  all  their  promises.  Just  as  soon 
as  the  Treasury  began  to  pay  its  debts  in  the  world's  money  they 
discharged  theirs,  and  now  they  outrank  their  rival.  The  national 
Treasury  will  not  exchange  them  for  gold.  But  this  is  only  inci- 
dental to  our  inquiry  into  the  machinery  that  supplies  them. 

P.  The  provision  of  currency,  being  the  prerogative  and  the 
duty  of  the  civil  government,  the  mechanism  or  organization  of 
the  agencies  ought  to  be  prescribed,  in  order  that  unity  of  action 
and  aim  among  them  may  be  controlled  and  secured  ;  and  for  this 
reason  the  whole  system  should  be  held  within  the  jurisdiction  of 
the  national  authority.  Making  in  effect  a  multitudinous  national 
bank,  as  the  mint  that  coins  the  metallic  money  is  the  national 
provider  of  its  kind  of  circulation. 

T.  With  the  difference  that  the  issue  of  paper  money  is  not  a 
mere  mechanical  action  upon  a  raw  material  having  an  intrinsic 
value,  by  change  of  form  and  authentication  of  weight.  The  cir. 
culating  note  has  no  other  than  a  service  value.  These  two  kinds 
of  medium  are  not  so  exactly  alike  that  they  can  be  treated  as 
subject  to  the  same  management  in  all  particulars,  though  they 
answer  the  same  common  purpose.  In  one  respect  they  are  alike  : 
a  national  Treasury  office  cannot,  any  more  than  a  national  Mint, 
perform  the  functions  of  a  bank  of  discount  and  deposit,  and  in 
no  proper  sense,  that  of  a  bank  of  issue — that  is,  it  cannot  be  a 
dealer  in  the  money  market.  The  office  of  the  sovereignty  is  not 
the  management  of  business  exchanges.  All  our  paper  currency 
now  is  directly  or  intermediately  a  promise  of  redemption  by  the 
Treasury.  Our  greenbacks  and  national  bank  notes  are  in  this 
alike.  In  another  respect  they  are  unlike.  The  greenback  is 
simply  an  assurance  of  its  own  value  ;  the  national  bank  note 
combines  private  responsibility  with  that  of  the  nation.  The 
nation  is  no  farther  involved  in  the  administration  of  the  general 
banking  business  than  as  security  for  its  credit  currency. 


232  POLITICAL   ECONOMY. 

Observe  that  a  bank  may  be  styled  national,  which  is  only  a 
fiscal  agent  of  the  government,  as  was  the  Bank  of  Venice,  and 
that  of  Genoa,  or  as  the  Bank  of  England,  or  the  old  Bank  of  the 
United  States  might  be  so  styled.  In  our  present  use  of  the  term 
it  means  only  that  the  general  system  is,  to  a  limited  extent, 
under  the  warranty  and  control  of  the  government :  the  conduct 
of  the  individual  institutions  in  their  business  with  the  community 
being  under  the  management  of  the  private  shareholders. 

P.  The  proposed  abolishment  of  the  national  bank  circulation, 
and  replacing  it  by  an  equal  or  sufficient  amount  of  United  States 
notes,  or  greenbacks,  would  not  take  away  the  necessary  agency 
of  banks,  or  money  offices,  if  the  national  Treasury  cannot  per- 
form all  the  offices  of  the  banker.  All  the  difference  which  such 
a  displacement  of  the  bank  notes,  and  replacing  them  by  green- 
backs would  be,  making  them  read  "the  United  States"  instead 
of  "  The  National  Bank  "  of will  pay  to  bearer dollars. 

T.  That  difference  would  be  nothing  in  the  value  or  security  of 
the  note.  But  it  might  open  the  way  to  a  release  of  the  substi- 
tuted institutions  from  the  existing  supervision  of  the  government ; 
and  their  customers  and  the  general  public  might  be  left  to  such 
care  or  carelessness  as  the  many-headed  and  many-minded  State 
governments  would  substitute.  Congress  could  forbid  any  other 
circulation  than  its  own  issues  ;  but  there  its  control  would  neces- 
sarily end.  The  convertibility  would  not  be  better  assured  in 
promptitude  or  certainty.  But  I  have  not  seen,  nor  can  I  im- 
agine any  analysis  of  the  system  proposed  that  is  clearly  under- 
standable. I  have  met  nothing  in  its  argument  but  faults  alleged 
against  the  system  which  it  attacks.  Nothing  whatever  amenda- 
tory in  the  proposed  change. 

P.  I  did  not  intend  to  introduce  a  discussion  in  the  form  of  a 
debate  with  the  Greenbackers.  I  merely  desired  to  have  the 
requirements  of  a  banking  system  canvassed. 

T.  The  banking  system,  resolved  into  an  instrument,  a  sub- 
medium,  ancilliary  to  the  money  medium,  its  use  is  essentially, 
indeed  wholly,  in  its  convenience,  and  this  quality  and  character 
must  rule  its  policy  all  through  its  details.  Not  only  the  currency 
which  it  supplies,  but  the  collocation  of  its  places  of  business  are 
required  to  be  convenient  as  depositories,  as  clearing  houses,  as 


BANKING.  233 

reservoirs  and  distributors  of  money  through  the  channels  which 
lead  to  its  appointed  work.  As  administrators  of  all  these  offices, 
banks  are  required  to  be  adjusted  to  vicinages  of  such  areas  and 
business  activities  as  will  bring  home  their  services  or  make  them 
handy.  Their  number  should  be  limited  by  no  other  conditions 
than  convenience  of  location  and  conformity  of  expense  to  the 
service  they  are  to  perform. 

D.  Admitting  these  requirements  as  to  the  distribution,  and, 
resultingly,  to  the  number  of  these  money-shops,  it  does  not  follow 
that  they  should  all  be  incorporated,  or  all  supplied  with  circulat- 
ing notes  of  their  own  issuance. 

T.  Under  the  existing  system  the  notes  are  of  nowhere  in  par- 
ticular and  everywhere  in  general.  Whether  put  into  circulation 
by  a  corporation  in  Maine  or  in  Dakota  is  indifferent.  They  are 
universally  good,  and  equally  good,  whether  the  particular  bank 
that  promises  to  redeem  them  is  broken  or  sound  ;  but  it  is  some- 
thing to  have  them  under  such  supervision,  impulse,  and  restraint 
as  makes  of  the  whole  of  them  one  body,  governed  by  one  head, 
so  far  as  the  parts  can  be  put  under  its  direction. 

P.  There  are  now  above  two  thousand  of  these  national  banks 
in  the  United  States.  Is  this  number  found  to  answer  all  the  ends 
in  view  ? 

T.  The  distribution  and  location  are  left  to  adjust  themselves 
in  perfect  freedom,  and  to  correct  their  errors  as  freely  as  to  make 
them.  Some  of  these  banks  go  voluntarily  into  liquidation.  They 
are  governed  in  place,  number,  and  capital,  as  all  other  business 
is,  by  the  circumstances  around  them.  In  this  respect  it  is  the 
freest  and  best  system  of  banking  that  ever  was  devised. 

This  policy  is  like  that  long  in  operation  in  Scotland,  which 
is  agreed,  on  all  hands,  to  have  better  borne  the  test  of  time  and 
experience  than  any  other  under  the  old  time  regime  in  Europe  or 
America.  They  have  been  distinguished  by  their  freedom  from 
disturbing  fluctuations  in  the  amount  of  the  currency  which  they 
circulate,  and  by  their  complete  exemption  from  those  epidemic 
failures  which  have  so  frequently  visited  England  and  the  United 
States.  Single  and  singular  failures  have  happened  in  perhaps 
half  a  dozen  instances  within  the  present  century  through  fraud 
and  folly  of  the  directors,  just  as  "accidents  happen  to  the  best  of 
16 


234  POLITICAL  ECONOMY. 

families."  But  they  have  earned  and  enjoyed  a  reputation  among 
the  people,  high  and  low,  so  well  assured  that  in  Scotland  there  is 
no  horror  or  terror  of  banks,  no  distrust,  and  none  of  that  per- 
petual endeavor  at  change  in  policy  which  constantly  agitates  the 
other  peoples  who  are  still  trying  to  make  the  old  bottles  hold  the 
new  wine  of  financial  revelation. 

P.  If  the  Scotch  banks  enjoy  such  public  confidence,  what  is 
the  manner  and  what  the  means  of  securing  a  trust  so  constant  and 
complete  ? 

T.  Mark  well,  and  inwardly  digest  their  peculiar  policy.  They 
allow  interest  upon  deposits  at  only  1  per  cent,  below  the  current 
market  rate,  and  so  enlist  the  whole  mass  of  provident  people  in 
their  support ;  for  a  vast  popular  interest  is  thus  at  stake  upon 
their  solvency.  They  lend  money  upon  bonded  securities — a  sys- 
tem which  would  break  banks  in  any  degree  tender  in  reputation, 
or  devoted  to  the  main  and  governing  notion  of  convertibility  by 
adequate  reserves  in  cash.  Their  customers  thus  get  operating 
capital  on  loan  in  advance,  instead  of  waiting  until  they  have  the 
proceeds  of  their  enterprise  in  notes  of  hand  for  discount;  that  is, 
it  is  not  on  values  already  produced  or  earned,  but  on  those  to  be 
earned  by  aid  of  credit,  that  the  borrower  receives  timely  aid  from 
them.  They  are  really  and  eifectively  credit  agencies.  Besides 
all  these  conveniences  provided  by  the  Scotch  banks  for  the  indus- 
trious public,  they  issue  notes  as  low  as  one  pound.  No  old  fogy 
fear  of  driving  out  the  "  precious,"  which  is  never  adequate,  by 
its  substitutes,  you  see.  Another  reversal  of  the  popular  and  es- 
tablished doctrines  of  the  money  laws.  On  the  contrary  then- 
money  system  looks  to  the  common  weal  in  all  its  workings.  It 
takes  care  of  the  people  and  they  take  care  of  it. 

P.  Does  the  distribution  and  collocation  of  money  offices  in 
Scotland  tally  with  that  of  our  own  country  under  our  present 
system  of  banking  ? 

T.  In  1870  Scotland  had  11  banks  and  689  branches,  say  700 
banking  offices.  The  population  at  3,400,000  would  average  1 
such  office  to  4857  people  of  all  ages.  They  are  distributed  over 
an  area  equal  to  only  two-thirds  of  that  of  the  State  of  New  York, 
with  a  population  30  per  cent.  less.  It  is  said,  upon  authority, 
that  they  extend  into  every  village  in  the  kingdom.     In  general 


BANKING.  235 

average  it  had  1  banking  office  to  84  square  miles  of  territory  ; 
Pennsylvania  had  then  1  to  232  square  miles  ;  New  York,  1  to 
150 ;  Massachusetts,  1  to  38  ;  Rhode  Island,  1  to  21  ;  and  Ohio, 
1  to  296.  These  territories  divided  into  equal  squares  would  give 
a  radius,  or  half  diameter,  of  4 h  miles  to  Scotland  ;  to  Pennsyl- 
vania, 7  J  miles  ;  to  New  York,  6|  miles  ;  to  Massachusetts,  3 
miles  ;  to"  Rhode  Island,  2T\  miles  ;  and  to  Ohio,  8J  miles.  This, 
however,  presents  the  plat  without  distinguishing  the  varied  occupa- 
tion of  space  in  cities  and  villages,  in  mountains  and  plains.  If 
the  proper  adjustment  to  population  and  business  were  made  it 
would  probably  bring  the  banking  offices  of  Scotland  quite  up  to 
the  allotment  of  Rhode  Island. 

In  1871  Scotland  had  a  total  population  only  equal  to  14J  per 
cent,  of  that  of  England  and  Wales,  but  it  had  then  a  note  circu- 
lation equal  to  IDyL  per  cent,  of  theirs  ;  having  a  requirement  no 
larger  comparatively  than  as  Edinburgh  compares  with  London, 
and  Glasgow  with  Liverpool.  A  circulation  one-half  less  would 
scarcely  put  it  on  a  level,  their  respective  business  requirements 
beincr  considered.     In  fact  1  to  20  would  not  be  too  much. 

As  a  general  judgment  carefully  formed' of  the  Scotch  banking 
policy,  I  submit  an  extract  from  Mr.  Colwell's  Ways  and  Means 
of  Payment,  p.  425  : — "  In  Scotland  the  preference  for  a  paper 
currency  is  strongly  marked  in  all  the  channels  of  business. 
Neither  the  Rebellion  of  1715  nor  1745,  nor  the  disturbances 
following  upon  the  French  Revolution  of  1793  and  1797,  which 
stopped  the  Bank  of  England,  nor  the  grand  crash  among  the 
English  banks  in  1825,  could  alarm  the  Scotch  people  or  .produce 
a  run  upon  their  banks.  No  currency  of  modern  times  has  been 
more  effective  and  less  fluctuating  in  value  and  quantity  than  that 
of  Scotland.  This  is  expressly  admitted  by  Committees  of  both 
Houses  of  the  British  Parliament." 

Let  me  introduce  another  quotation  from  the  same  author :  "  An 
opinion  has  grown  up  and  become  a  law  in  the  act  of  1844  (the 
charter  of  the  Bank  of  England),  that  a  paper  currency,  to  be 
perfect,  should  fluctuate  as  a  gold  currency  would  do,  if  it  were 
the  sole  medium  of  payment.  To  the  mind  of  a  Scotch  banker,  a 
greater  absurdity  could  not  be  presented  in  as  many  words.  He 
would  say:   '  What!   when  a  demand  springs  up  for  gold,  in  con- 


236  POLITICAL  ECONOMY. 

sequence  of  some  foreign  war,  must  we  so  regulate  the  issues  of 
our  banks  as  to  reduce  the  currency  of  notes  in  the  proportion 
that  the  currency  of  gold  is  carried  off?  Rather  should  we  in- 
crease our  issues,  and  supply  the  place  of  the  currency  that  is 
exported.'  " 

P.  What  is  the  quantity  or  proportion  of  bank  notes  required 
in  the  business  of  Great  Britain,  France,  and  the  United  States  ; 
or  at  what  figure  would  the  provision  of  notes  be  clearly  below 
the  requirement,  and  at  what  amount  would  they  reach  the  stage 
of  what  is  called  inflation  ? 

T.  The  data  for  a  calculation  are  exceedingly  uncertain.  Their 
volume  for  the  service  of  business  cannot  be  fixed  even  for  an 
approximate  estimate.  Under  any  determinate  amount  the  pro- 
vision arbitrarily  made  and  limited  is  sometimes  too  little,  and 
sometimes  redundant.  Money  of  all  kinds  is  thus  under  the  laws 
of  trade  as  other  commodities  are.  Estimates  made  for  any  time 
or  place  in  arithmetical  figures  are  not  worth  the  trouble  of  the 
inquiries  and  conjectures.  Our  amended  national  banking  system 
has  upon  good  grounds  fairly  abandoned  the  problem.  In  some 
parts  of  the  country  a  very  large  part  of  the  payments  made  re- 
quire money;  in  others  only  an  infinitesimal  quantity  is  used  or 
necessary.  Where  there  are  few  banks  or  bankers,  much  money 
in  form  is  needed  ;  where  banks  acting  as  clearing-houses  abound, 
more  than  nine-tenths  of  all  payments  are  made  by  set-off,  or  an 
exchange  of  debts  for  credits.  In  the  season  of  the  year  when 
our  agricultural  products  are  being  moved  from  the  West  to  dis- 
tant markets  much  cash  is  in  demand. 

And  as  to  difference  of  place :  In  California  there  has  usually 
been  more  than  twice  or  three  times  more  in  circulation  than  in 
Virginia.  In  the  Southern  States  a  verv  considerable  increase  is 
required  since  the  emancipation  of  the  laborers.  Moreover,  just 
as  exchanges  are  better  regulated, — that  is,  as  banks  and  clearing- 
houses gather  up  debts  and  credits,  and  balance  them  against 
each  other,  money  is  eliminated.  For  example :  England  and 
Wales  reduced  their  circulating  medium  in  the  ten  years,  ending 
in  1874,  more  than  18  per  cent.  ;  while  the  exports  and  imports 
of  British  and  Irish  products  increased  above  49  per  cent. 

You  see  that  a  circulation  of  cash  should  be  elastic,  and  that  its 


BANKING.  237 

volume  should  expand  and  contract  like  a  spiral  spring  to  effect  its 
adjustment  to  service. 

P.  A  spiral  spring  has  the  convenience  of  meeting  the  weight 
it  is  intended  to  support ;  and  it  would  be  an  odd  sort  of  a  balancer 
if  it  were  wedged  up  or  tied  down  to  a  certain  notch  on  the  regis- 
tering disk. 

T.  You  have  fairly  disposed  of  an  arbitrary  maximum  and 
minimum  in  the  measurer  and  supporter  of  a  variant  pressure. 
The  national  bank  constitution  has  perfect  provision  for  every 
change  in  the  movement  of  the  business  it  is  intended  to  serve. 
It  is  limited,  on  the  one  side,  only  by  the  securities  pledged,  and, 
on  the  other,  it  adapts  itself  to  the  range  of  the  requirement  with- 
out any  jar  or  break  in  the  machinery. 

D.  The  opponents,  however,  allege  that  the  plan  affords  a 
doubled  profit  upon  the  circulating  notes  issued  from  the  Treasury 
to  the  banks, — that  they  draw  interest  upon  the  bonds  deposited 
as  securities,  and  another  interest  upon  the  circulation  based  upon 
these  same  securities. 

T.  I  can't  think  of  going  into  a  party  wrangle.  That  would 
carry  us  away  from  the  drift  of  our  inquiry  into  the  fundamental 
principles  of  banking  and  currency.  We  find  switch-tracks  enough 
along  our  own  thoroughfare  that  are  not  quite  avoidable.  But  I 
consent  to  a  digression  long  enough  and  wide  enough  to  show  that 
the  objection,  as  you  present  it,  is  too  broad  for  the  facts  on  which 
it  is  made  to  rest. 

First.  The  national  bonds  deposited,  paying  4,  4|,  5,  and  6  per 
cent.,  are  as  much  the  property  of  the  shareholders,  and  as  much 
entitled  to  the  accruing  interest  as  if  they  were  held  in  unincor- 
porated hands.  They  are  as  liable  to  redemption  and  to  refund- 
ing at  lower  rates  of  interest  as  if  they  were  held  by  any  indi- 
vidual in  the  nation.  Does  the  objection  lie  against  the  payment 
of  interest  upon  them  ? 

D.  Of  course  not.  But  the  other  interest  that  the  banks  make, 
or  may  make,  by  lending  the  notes  which  represent  exactly  the 
same  property-right  and  resulting  interest  which  they  have  in  the 
bonds.     That  is  the  matter  to  be  disposed  of. 

T.  How  much,  or  whether  there  is  any  profit  arising  from  the 


238  POLITICAL  ECONOMY. 

circulation,  ought  to  be  settled,  in  order  to  get  at  the  answer  to 
this  allegation. 

I).  In  New  York  loans  carry  a  legal  interest  of  7  per  cent,  per 
annum  ;  in  other  States  not  less  than  6  per  cent.  ;  and,  in  some 
parts  of  the  country,  10  per  cent.,  or  larger,  if  fixed  by  contract 
between  the  borrower  and  lender. 

T.  You  have  stated  the  legal  rates  chargeable  and  recoverable 
under  the  laws  of  the  local  legislatures  ;  but  you  have  not  ascer- 
tained the  actual  net  rates  realized  by  the  banks.  Be  careful 
that  you  do  not  over-charge  the  product  of  the  privilege'which 
they  enjoy. 

D.  I  am  not  sufficiently  acquainted,  for  the  purpose  of  this 
calculation,  with  the  amount  of  the  abatement  that  may  be  claimed 
from  the  customary  rate  of  profit  upon  the  sum  delivered  to  the 
banks  for  their  use. 

T.  Neither  can  I  act  as  an  accountant  to  settle  this  point  with 
any  one  of  the  institutions,  nor  with  the  whole  of  them  ;  but  let 
me  submit  some  of  the  facts  that  are  involved  in  the  question. 

In  the  first  place,  a  fair  presumption  arises  from  the  fact  that 
the  opportunity  for  securing  the  advantages  of  this  circulation  is 
open  to  all  capitalists,  to  an  unlimited  extent,  yet  the  fact  is  that 
when,  in  November,  1879,  the  organized  banks  were  entitled  to 
draw  from  the  Treasury  388  millions  of  notes,  there  had  been 
issued  to  them  only  319J  millions,  leaving  not  called  for  68  mil- 
lions. If  the  circulation  were  so  profitable  as  is  alleged,  why  did 
they  not  avail  themselves  of  more  than  four-fifths  of  the  amount 
which  they  were  entitled  to  ? 

But  still  more  decisively  as  to  the  charge  of  a  double  interest 
upon  the  investment  in  the  bonds  pledged  for  the  note  securities, 
the  Comptroller,  who  must  be  allowed  to  understand  the  force  and 
effect  of  the  figures  which  he  handles,  shows  that  subtracting  the 
taxes,  National  and  State,  imposed  upon  their  circulation,  the  net 
profit  would  be  no  more  than  1T7¥  per  cent,  upon  the  amount 
which  they  deposit  in  bonds  for  security  if  they  loaned  them  at  8 
per  cent.,  and  1T3¥  per  cent,  if  at  6  per  cent. 

D.  There  may  be  causes  operating  and  abating  the  profit  upon 
circulating  notes  which  withhold  outsiders  from  rushing  for  them 
upon  the  issue  department  of  the  Treasury,  and  also  restraining 


BANKING.  239 

the  national  banks  from  drawing  their  full  allowance.  I  have 
already  said  that  I  am  not  sufficiently  acquainted  with  the  pros 
and  cons  of  the  case  to  meet  the  apparent  facts  that  bear  upon  it. 

T.  For  the  details  and  proofs  of  the  Comptroller's  calculation, 
I  must  refer  you  to  his  annual  report  of  1879 — you  will  there  find 
its  conclusions  thoroughly  sustained. 

The  difference  between  the  loans  of  these  notes  at  8  and  at  6 
per  cent,  may  be  averaged  at,  perhaps,  one  and  a  half  per  cent., 
but  there  are  other  items  that  so  far  diminish  the  profit  on  them 
as  may  possibly  reduce  it  to  nothing.  The  circulation  ought  to 
be  charged  with  its  proper  share  of  the  banks'  expenses  in  the 
conduct  of  their  business,  and  of  the  losses  sustained  by  default 
of  the  borrowers.  Now  the  total  losses  of  the  national  banks  in 
the  last  four  years  have  averaged  above  $20,000,000  per  annum  ; 
and  the  current  expenses  over  $6,000,000.  That  one  and  a  half 
per  cent,  net  profit  over  the  national  taxation  upon  the  circulation, 
the  bonds  being  assumed  to  be  reduced  to  four  per  cent.,  as  they 
are  rapidly  being,  will  hardly  cover  losses,  expenses,  and  the  con- 
stantly  declining  market  value  of  the  bonds  as  they  approach 
maturity,  which  last  item  of  abatement  of  profit  must  also  be 
considered  as  these  bonds  must  be  purchased  by  the  shareholders 
at  a  premium  which  will  be  totally  lost  when  they  become  paya- 
ble, and  are  losing  that  premium  all  the  while,  until  they  shall  be 
worth  no  more  than  their  face  value.  What  now  has  become  of 
the  alleged  double  interest  so  much  complained  of  ? 

P.  Assuming  that  banking  profits  proper  must  come  from  loans 
and  discounts  (excluding  the  investments  in  United  States  bonds 
and  other  stocks),  I  have  been  looking,  since  our  last  meeting,  at 
the  ratio  that  they  bear  to  the  circulating  notes,  as  their  means  of 
business  profits.     Let  me  submit  the  results  : — 

In  October,  1879,  2048  national  banks  reported  their  aggregate 
loans  and  discounts  at  $878,503,097  ;  their  circulating  notes,  less 
the  amount  on  hand  or  unused,  $297,078,812.  Thus  the  notes, 
active  and  outstanding,  were  but  33.8  per  cent,  of  their  loans  and 
discounts,  or  say  one-third  of  their  profit-making  means  employed. 
The  average  of  the  notes  to  the  loans  of  the  6  years  (1874-79), 
fell  to  32.04  per  cent.,  and  of  the  half  year  ending  11th  of  June, 
1880,  they  stood  at  29.88. 


240  POLITICAL  ECONOMY. 

But  I  was  especially  interested  by  the  unlike  employment  of 
these  notes  by  banks,  situated  as  to  their  respective  business  com- 
munities. My  examination  shows  that  the  larger  the  centres  of 
business,  the  less  is  the  proportion  of  notes  used,  and  the  largest 
institutions  in  the  same  localities,  having  the  larger  amount  of 
deposits,  usually  employ  the  less  amount  of  notes  drawn  from  the 
Treasury,  indicating  that  the  promise  of  profit  from  their  use  is 
not,  in  itself,  as  inviting  as  might  be  supposed  on  the  supposition 
that  they  are  a  means  of  deriving  a  double  interest  on  the  bonds 
deposited  for  their  security.     For  instance  : — 

The  circulation  of  national  bank  notes  by  the  country  banks 
of  Massachusetts  is  equal  to  60 \  per  cent,  of  their  loans  and  dis- 
counts; while  that  of  Boston  is  31.2  per  cent.  The  country  banks 
of  New  York  State,  45.4  per  cent.  ;  that  of  the  city,  but  11.4  per 
cent.  Of  Pennsylvania,  54  per  cent. ;  of  the  city  of  Philadelphia, 
20.8  per  cent.  That  of  Maryland,  53.4  per  cent. ;  of  the  city  of 
Baltimore,  29  per  cent.  The  State  or  country  banks  of  Ohio,  52.8 
per  cent.  ;  of  Cincinnati,  27  per  cent.  The  State  of  Illinois, 
38.2  per  cent.  ;  of  Chicago,  only  3.34  per  cent.  There  are  further 
proofs  in  the  same  direction,  or  that  the  larger  banks  employ  the 
less  of  this  kind  of  currency.  The  Fourth  National  Bank  of  the 
city  of  New  York  has  but  5.78  per  cent,  of  its  loans  and  discounts 
in  notes  of  its  own.  The  Chemical  Bank  has  none  at  all;  its  loans 
and  discounts  amounting  to  upwards  of  9  J  millions;  its  business  is 
based  upon  its  capital,  surplus,  undivided  profits,  and  deposits, 
aggregating  $14,616,835.  The  Fulton  Bank  of  the  same  city 
employs  none  of  its  own  notes  ;  and  the  City  Bank,  also,  has  no 
notes  outstanding ;  its  loans  and  discounts  are  within  a  fraction  of 
7  millions,  its  deposits  9 \  millions.  All  the  other  banks  of  that 
metropolitan  business  city  have  only  a  very  small  percentage  of 
their  public  accommodations  in  national  bank  notes  of  their  own 
issue  ;  aggregating  and  averaging  only  11.4  per  cent,  of  their 
loans  and  discounts  as  against  those  of  the  country  banks  of  the 
State,  which  reach  45.4  per  cent. 

To  the  like  inference,  the  several  States  of  the  Union  which 
have  a  less  active  business  exchange,  have  a  proportionately 
greater  national  bank  circulation.  Their  money  medium  being 
proportionately  the  greater  to  their  means  of  settlement  of  balances. 


BANKING.  241 

Thus,  the  notes  used  in  ratio  to  loans  and  discounts  in  West 
Virginia  are  56.4  per  cent.  ;  in  Georgia,  61  ;  in  Florida,  62  ;  in 
Alabama,  76  ;  in  Kentucky,  63.6  ;  in  the  District  of  Columbia, 
93  ;  and  in  Washington  City,  58.2  ;  or,  in  the  District  including 
the  Federal  City,  64  per  cent. 

Indeed,  so  well  and  generally  is  the  use  of  the  circulating  note 
employed  in  inverse  proportion  to  the  wealth  and  business  activity 
of  the  regions,  that  their  rank  might,  other  circumstances  being 
allowed  for,  be  estimated  by  their  relative  amount  to  that  of  the 
general  credit  system. 

You  have  elsewhere  said  that  the  measure  of  fixed  to  floating 
capital  in  a  nation,  or  state,  or  community,  is  the  truest  measure 
of  its  real  wealth  and  grade  of  civilization.  In  the  proportion  of 
the  circulating  money  medium  to  the  total  exchanges  of  a  people's 
business,  it  seems  to  me  that  a  like  indication  of  their  business 
prosperity  may  be  seen.  Or,  as  you  have  said,  the  more  and  more 
perfect  organization  of  exchange  values  that  is  effected,  money  in 
form  of  coins  and  notes  is  the  more  and  more  eliminated,  and  credit 
is  substituted  for  cash. 

T.  In  making  the  general  statements  and  the  inferences  from 
facts  which  I  believe  support  them,  I  do  not  submit  them  to  the 
exact  figures  of  statistical  reports.  In  them  you  find  more  of 
bookkeeping  rules  than  of  practical  issues;  and,  they  are,  besides, 
subject  to  many  modifications  of  their  apparent  footings  and  bal- 
ancings. You  were,  perhaps,  surprised  to  find  that  Chicago  had 
but  3J  per  cent,  of  its  loans  in  its  outstanding  bank  notes,  while 
Boston  had  above  31,  and  New  York  City  had  11.4.  The  expla- 
nation, probably,  is  that  Chicago  sold  its  deposited  bonds  when  they 
were  commanding  a  high  premium,  and  depended  upon  its  deposits 
for  its  current  cash,  while  the  two  other  cities  had  their  own  reasons 
for  a  larger  use  of  or  reliance  upon  their  note  circulation.  Figures 
are  not  responsible  for  the  facts  which  they  seem  to  represent ; 
and,  especially,  they  do  not  support  all  the  deductions  which  in- 
expert people  draw  from  them.  With  the  required  allowances,  I 
think  your  investigation  of  the  bank  reports  fully  sustains  your 
conclusion  that  the  circulation  of  the  national  banks,  where  they 
have  other  profitable  resources,  is  not  an  attractive  investment,  and 
that  it  is  mainly  used  only  by  the  institutions  which  have  compara- 


242  POLITICAL  ECONOMY. 

tively  small  deposits  to  work  upon.  You  will  doubtless  have  ob- 
served that  the  smaller  banks  in  the  principal  cities  have  a  circu- 
lation of  outstanding  notes  gi-eatly  larger  in  proportion  to  their 
business  dealings  than  those  which  have  a  higher  standing  with 
the  people.  Conditions  are  always  to  be  considered,  outside  of 
arithmetical  results.  I  have  no  doubt  that  twice  two  make  four, 
but  it  is  equally  certain  that  the  doubling  of  an  excise  or  impost 
duty  does  not  yield  a  double  revenue.  Our  Congress  has  time 
and  again  ventured  upon  that  solution  of  the  tax  problem  and  al- 
ways failed  of  the  expected  product,  sometimes  by  subtraction, 
sometimes  by  multiplication,  under  the  rules  of  arithmetic,  with 
uniform  disappointment.  Just  as  some  people  imagine  that  an 
increase  of  money  issued  must  increase  its  quantity  for  use — which 
is  a  similar  mistake. 


CHAPTER  XIX. 
INTERNATIONAL  TRADE. 

D.  I  am  glad  that  we  have  reached  the  subject  of  commerce. 
The  discussion  of  its  topics  threatens  less  friction  with  the  au- 
thorities than  we  have  had  up  to  this  time.  The  pervading  philan- 
thropy of  international  association  in  business  affairs  has  an  ob- 
vious tendency  to  make  "  the  whole  world  kin."  Its  ministry  in 
the  distribution  of  nature's  beneficence,  which  is  partial  in  allot- 
ment, as  if  for  the  very  purpose  of  compelling  interchange  and 
effecting  a  virtual  partnership  in  the  cultivation  and  interchange 
of  the  products  of  all  regions,  climates,  and  capabilities  of  the 
earth, — must  meet  the  aspirations  of  a  universal  brotherhood,  and 
tends  as  far  towards  communism  and  cooperation  as  can  be  made 
to  work  smoothly  in  the  plan  of  universal  association. 

P.  Oratory  and  poetry,  impassioned  by  universal  benevolence, 
concur  in  regarding  the  commerce  that  brings  distant  nations,  and, 
unlike  tribes  of  men,  into  familiar,  reforming,  and  ameliorating 
mutuality  of  influence  upon  each  other,  as  a  civilizer,  educator, 
wealth-producer,  harmonizer,  and  organizer  of  the  world's  social 
and  industrial  interests. 


INTERNATIONAL   TRADE.  243 

T.  Between  you,  you  have  drawn  a  sufficiently  correct  copy  of 
the  usually  highly  colored  picture  of  all  the  virtues  of  interna- 
tional trade,  paraded  in  solid  column,  and  in  full  march  upon  all 
the  evils  of  the  five  quarters  of  this  disordered  globe,  with  the 
millennium  in  purpose  and  perspective ;  civilization  chivalrously 
devoting  itself  to  the  redress  of  all  the  ills  of  barbarism,  and  to 
the  happy  reformation  of  all  the  inequalities  in  the  conditions  of 
the  more  advanced  nationalities,— the  armies  of  trade  spreading 
the  tidings  of  great  joy  to  all  peoples, — cosmopolitan  philanthropy 
bearing  peace  and  goodwill  to  all  men  ! !  "  How  beautiful  upon 
the  mountains  [and  the  seas]  are  the  feet  [and  fleets]  of  them 
that  bring  good  tidings,  that  publish  peace  !  !"  (Isaiah  lii.  7.) 

But  allow  me  to  call  your  attention  to  some  of  the  facts  of  this 
history — a  very  different  picture,  truly.  The  North  American 
Indians  have  not  prospered  in  their  international  trade.  It  does 
not  seem  to  work  Avell  among  parties  in  greatly  unequal  condi- 
tions. Hunters  do  not  improve  their  hunting-grounds  by  trade 
with  those  who  cultivate  theirs.  That  may  be  owing  to  the  utter 
incapability  of  the  savage  ;  but,  among  a  people  much  less  un- 
equal by  qualification  for  the  strife,  how  is  it  ?  A  member  of  the 
British  Parliament  lately  said,  "  Some  of  the  finest  tracts  of  land 
in  India  have  been  forsaken  and  given  up  to  the  untamed  beasts 
of  the  jungle.  The  motives  to  industry  have  been  destroyed.  Gro 
with  me  to  the  northwest  provinces  of  the  Bengal  Presidency,  and 
I  Avill  show  you  the  bleaching  skeletons  of  500,000  human  beings 
who  perished  from  hunger  in  the  space  of  a  few  short  months  ; 
yes,  of  hunger,  in  what  has  been  called  the  granary  of  the  world. 
Famines  have  continued  to  increase  in  frequency  and  extent  under 
our  sway  for  more  than  half  a  century."  Foreign  trade  in  this 
case  shows  no  signs  of  benefits  conferred  upon  the  weak  by  the 
strong.  Here  it  seems  the  divine  order  is  reversed.  The  angels 
of  traffic  do  not  minister  unto  the  heirs  of  salvation. 

Under  the  influence  of  international  trade  Turkey  has  become 
"  the  sick  man  of  Europe."  The  Portuguese,  once  the  masters  of 
maritime  commerce,  as  you  fondly  call  it,  have  changed  places 
with  their  former  victims.  In  the  language  of  Mr.  Cobden, 
"  Turkey  and  Portugal  have  become  a  burden  and  a  curse  to 
England."     And  how  have  Ireland  and  the  West  Indies  fared  ? 


244  POLITICAL  ECONOMY. 

The  apologists  of  the  system  urge  in  explanation  of  the  mischiefs 
which  it  works :  The  Turks  are  Mohammedans  ;  the  East  Indians 
are  Pagans;  the  Irish  are  Celts;  and  the  Portuguese,  though  Cau- 
casians, are  Catholics.  These  are  the  reasons  why  the  ameliora- 
tions of  foreign  trade  have  not  resulted  to  them.  But  they  had 
all  these  characteristics  before  England  had  made  herself  the 
workshop  of  the  nations  and  the  mistress  of  the  seas.  Something 
has  happened  since  "  her  march  was  o'er  the  mountain  wave,  her 
home  was  on  the  deep;"  since  she  has  needed  no  protecting 
"  bulwark"  against  her  former  rivals  in  maritime  trade. 

In  sober  truth  this  trade,  until  within  the  period  of  a  couple  of 
centuries,  was  simply  what  we  now  call  piracy.  Its  occupation 
was  pillage  of  chattels,  chattelizing  of  men,  and  the  extension  of 
political  dominion  for  the  maintenance  of  industrial  supremacy. 
Sir  Walter  Raleigh  went  abroad  upon  the  high  seas  with  Eliza- 
beth's commission  as  a  privateer  ;  and  John  Newton,  after  the 
birth  of  Washington,  went  into  the  slave  trade  on  the  coast  of 
Africa,  with  an  outfit  of  hymn  books  and  hopples,  prepared  for 
the  civilization  of  the  heathen  !  The  slave  trade,  as  a  branch  of 
legitimate  foreign  commerce,  was  not  abolished  either  in  England 
or  the  United  States  until  after  I  was  born.  In  fact  the  morals 
of  maritime  adventure  and  trade  were  the  last  to  be  reformed  in 
the  conduct  and  policy  of  international  relations. 

Have  I  overstretched  or  overcolored  the  history  and  character 
of  this  thing  which  you  call  commerce,  as  if  it  were  an  equitable 
interchange  of  advantages  ? 

I).  But  it  is  nowT,  and  has  been  for  a  long  time,  the  subject  of 
public  law  and  treaty,  having  peace  and  equity  for  their  aim  and 
rule. 

T.  Aye,' the  trade  has  given  up  the  instruments  of  violence  for 
the  equally  effective  agencies  of  peace.  Changing  with  the 
changes  of  times  and  manners,  it  now  makes  its  predatory  inva- 
sions in  the  force  of  traffic  for  the  subjugation  of  every  feebler 
member  in  the  general  scramble  of  aggressive  competition ; 
seldom  and  unnecessarily  in  these  later  days,  using  the  power  of 
arms  to  open  the  way  for  the  superior  skill  of  hands,  and  the 
domination  of  larger  capital. 

J).  Oh!  I  understand.     A  paper  partition  substituted  for  the 


INTERNATIONAL    TRADE.  245 

Chinese  Avail  of  defence  against  the  Tartar  invasions — a  protective 
tariff  for  an  effective  barrier  against  cosmopolitan  commerce  with 
its  destructive  intendments.     Ah  ! 

T.  1  do  not  choose  the  alternative  of  seeming  either  a  fool  or  a 
fanatic.  I  would  have  national  independence  maintained  by  a 
policy  of  foreign  trade  strictly  defensive — nothing  more,  nothing 
less,  and  nothing  else. 

To  state  the  law  and  gospel  of  international  trade — its  liberty 
and  proper  limits — it  is,  in  general  terms,  allowable  only  where 
and  when  it  is  in  the  nature  of  things  unavoidable,  or  when  and 
where  the  welfare  of  the  parties  demands  it.  In  other  words, 
there  cannot  be  legitimate  trade  freer  among  nations  than  between 
individuals  ;  otherwise  it  is  not  commerce  in  the  proper  meaning 
of  the  word.  Or  let  me  condense  the  rule  into  this  form  :  all 
exchanges  of  property  and  services  are  in  their  true  character 
compulsory.     Is  that  statement  broad  enough  ? 

I).  It  is  a  broader  bit  of  logic  than  I  thought  a  protectionist 
would  avow  in  debate.  In  that  attitude  it  offers  fight  at  great 
odds  to  the  opponent. 

T.  Then  let  me  lay  out  its  length  and  breadth  by  metes  and 
bounds  in  full  survey.  In  my  apprehension  of  its  principles  and 
operations,  it  provides  for,  and  allows,  the  barter  of  surplusses  of 
natural  or  accidental  differences  while  they  exist.  It  levels  the 
hills  and  lifts  the  valleys  of  industrial  capabilities  ;  it  interchanges 
the  advantages  of  all  parties  differently  conditioned,  and  secures 
each  in  the  benefits  of  its  own,  and  in  fair  participation  in  those 
of  every  other ;  thus  serving  the  aggregate  man  of  all  nations, 
as  the  hand  helps  the  foot,  and  the  eye  supplements  the  ear  in  the 
individual  organism.  And  more  especially,  and  above  all  else,  it 
so  coordinates  exchanges  of  the  common  interests,  that  it  suffers 
none  of  the  agencies  to  interfere  with  any  other.  This,  its  appro- 
priate rule  and  governance,  is  grounded  upon  needful  and  helpful 
differences  between  the  parties  engaged  in  such  interchanges, 
which  is  the  only  rightfully  called  commerce,  contradistinguished 
from  its  abuse,  which  I  choose  to  call  trade,  when  the  character 
of  exchanges  are  designated  by  their  differences  of  effects. 

The  proper  meaning  of  the  word  commerce,  confines  its  appli- 
cation to   exchanges  of  differences.     Reduced  to  its  logical  and 


240  POLITICAL  ECONOMY. 

practical  significance,  commerce  between  nations  means,  or  should 
mean,  supplementary  supplies,  not  competitive  traffic.  It  means 
the  harmony  of  varieties,  not  the  domination  of  advantages.  It 
means,  if  not  equal,  at  least  common  benefits,  in  which  each  of  the 
contracting  parties  has  its  interests  promoted.  Any  other  system 
of  trade  is  simply  spoliation,  whether  between  nations  or  individ- 
uals. Commerce  is  not  virtual  war  under  pacific  forms  ;  it  is  the 
peace  of  equal  justice. 

Moreover,  commerce  is  not  lawless.  It  is  conditioned,  not 
unconditional.  It  must  be  held  in  keeping  with  its  proper  service. 
Its  broadest  and  most  constant  condition  is  in  the  necessity  of  im- 
porting whatever  of  the  useful  cannot  be  produced  at  home ; 
whether  from  hill  or  valley,  stream  or  mine,  or  soil,  or  from  a  dis- 
tant country.  In  respect  to  natural  products — the  temperate 
zones  must  bring  the  products  of  the  torrid  and  the  frigid  from 
the  climates  and  soils  and  seas  which  yield  them,  if  they  would 
have  them.  We  must  get  our  finest  furs  from  the  north,  and  our 
spices  from  the  south.  Commerce  in  such  commodities  must  be 
across  climates.  The  like  natural  law  applies  to  wines  and  wheat, 
to  ice  and  ivory,  and  to  all  things  dependent  upon  topographic 
conditions.  In  these  cases,  and  to  this  extent,  and  with  these 
limitations,  commercial  exchanges  are  supplementary,  indispensa- 
ble, and  unchangeable,  because  they  are  always  free  from  compe- 
tition and  the  mischiefs  incident  to  it. 

Such  are  nature's  laws  ;  and  customs  must  either  war  against 
them  or  conform  to  them,  with  the  inevitable  results. 

D.  How  about  the  domestic  substitutes  for  such  climatic  pro- 
ducts? Cotton,  produced  in  Texas,  rivals  the  silk  of  India;  the 
fermented  liquors  of  regions  that  grow  no  grapes  meet  foreign 
wines  in  the  home  market.  Would  you  bar  out  the  real  in  favor 
of  the  imitation  ? 

T.  You  have  not  mentioned  a  perfect  substitute,  nor  do  I  think 
you  can  find  one,  in  a  wholesale  or  retail  inventory  of  goods  any- 
where on  sale.  Beer  is  not  wine  for  all  uses;  neither  is  cotton 
the  identical  alias  of  silk.  A  preference  of  taste,  or  of  economy, 
is  a  matter  for  settlement  which  does  not  involve  the  principle  of 
domestic  against  foreign  competition.  The  new,  even  when  it 
displaces  the  old,  works  itself  into  use  which  municipal  law  can 


INTERNATIONAL    TRADE.  247 

neither  help  or  hinder.  It  defends  itself  against  all  rivalry,  ex- 
cept that  of  its  own  kind  in  international  trade.  All  progress  is 
arbitrary  change  by  substitution. 

I) .  Inasmuch  as  protective  tariffs  are  mainly  constructed  in  ref 
erence  to  manufactures,  and  very  seldom  embrace  raw  materials 
in  their  defensive  provisions,  free  trade  as  commonly  plants  itself 
against  restrictions  upon  the  importation  of  artificial  products. 
And  I  do  not  see  that  you  gain  either  time  or  strength  by  develop- 
ing the  exemptions  of  articles  that  are  governed  by  climatic  laws. 

T.  You  are  now,  perhaps  inadvertently,  but  none  the  less  cor- 
rectly, arraying  free  trade  against  the  interests  of  skilled  labor, 
with  a  decided  favoritism  to  that  drudgery  of  industry  which  holds 
it  to  the  grade  that  belongs  to  the  earlier  stages  of  civilization. 
Think  of  that.  Manufactures  in  their  modern  condition  employ 
the  natural  agencies  that  mark  the  advancement  of  society.  Agri- 
culture without  their  aid  and  reflected  influence  is  simply  the  bar- 
barism of  art.  But  to  your  objection  I  present  the  true  system  of 
defensive  import  duties  as  the  only  one  that  can  relieve  all  non- 
competing  imports  from  taxation.  Its  exemptions  stand  upon  the 
principle  that  supports  and  authorizes  its  restrictions  ;  while  a 
tariff  for  revenue  only  is  in  essence  and  operation  taxation  inflicted, 
like  domestic  excises,  upon  values,  without  regard  to  any  other 
interest  than  that  of  the  national  revenue.  Notice  this  grand  dif- 
ference. Free  trade  is  taxation  in  its  intention  and  operation  ; 
but  protection,  on  the  contrary,  intends  the  defence  of  domestic 
industry.  When  you  use  the  word  taxation  as  an  epithet  be  careful 
to  apply  it  where  it  logically  belongs. 

I).  You  do  not  put  artificial  products  upon  the  same  ground 
with  the  natural,  in  respect  to  international  commerce. 

T.  The  difference  between  them  is  the  ground  of  dispute  about 
them. 

I).  I  always  thought  that  there  is  a  good  deal  of  complexity,  if 
not  confusion,  in  the  doctrine,  as  well  as  in  the  framework  of  pro- 
tection. Manufacturers  frequently  complain  of  the  inequality  and 
injustice  of  the  rates  imposed  by  its  schedules  of  duties  ;  and,  as 
to  the  policy,  did  not  Mr.  Clay  and  Mr.  Webster  throw  the  weight 
of  their  advocacy  upon  the  right  of  countervailing  duties  to  meet 
and  punish  foreigners  who  taxed  our  exports  in  their  markets  ? 


248  POLITICAL  ECONOMY. 

An  argument,  by  the  way,  that  had  great  show  of  justice  or 
retributive  justice,  at  least,  while  its  provocation  continued  ;  but 
lost  all  its  force  when  the  free  trade  system  of  England  was  inaug- 
urated. Others,  in  the  past  and  present  time,  rest  the  fostering 
care  of  our  manufactures  upon  their  infancy — the  helplessness  of 
their  immaturity — though  they  have  enjoyed  the  nursing  of  about 
a  sixty  years'  minority,  which,  if  by  nature  capable,  ought  to  have 
come  of  age  by  this  time. 

T.  Mr.  Clay  and  Mr.  Webster  were  politicians,  or,  if  you  will 
have  it  so,  statesmen  of  their  time,  and  naturally  addressed  them- 
selves to  the  exigence  in  which  they  were  involved.  The  phi- 
losophers of  the  party,  even  in  their  day,  had  other  reasons  for 
their  opinions  ;  and,  in  the  changes  that  time  brings  with  it,  we 
are  certainly  at  liberty  to  rest  the  doctrine  upon  its  fundamental 
principles,  which  abide  under  all  changes  of  outside  conditions. 
Besides,  both  Clay  and  Webster  were,  through  the  whole  period  of 
their  interference,  candidates  for  the  presidency  of  the  Union, 
while  the  subject  was  under  discussion,  and,  accordingly,  they 
accommodated  their  theories  to  their  prospects.  They  can  be 
quoted  on  both  sides  of  their  great  question. 

Setting  aside  all  mere  generalities  upon  which  no  pertinent  issue 
can  be  joined,  propose  some  point  or  points  of  exception  to  the 
principle  and  substance  of  protection,  and,  if  you  could  at  the  same 
time,  indicate  the  corrections  that  are  in  free  trade,  we  might  get 
up  a  case  upon  its  merits. 

D.  Well,  with  leave  to  amend  my  charges  as  the  occasions  arise, 
I  complain,  first,  that: — A  tariifof  protection  is  necessarily  class 
legislation,  with  these  specifications : — If  it  contains  a  free  list, 
and  if  it  varies  the  rates  of  import  duties  upon  different  articles, 
as  it  always  does,  it  is  unequal,  and,  therefore,  inequitable  in  the 
burdens  imposed. 

T.  To  the  loose  general  charge  of  class  legislation  the  objection 
lies  that  it  is  indefinite.  Copyright  and  patent-right  are  protective 
of  a  class  or  classes,  and  prohibitive  to  all  but  the  beneficiaries. 
So  are  the  laws  that  assign  remunerative  duties  to  official  function- 
aries. Executive  appointments  make  a  class  of  public  officers,  and 
reserve  the  fees  and  salaries  to  persons  so  selected.  All  these 
favored  and  protected  persons  are  monopolists,  if  an  epithet  is  to 


INTERNATIONAL   TRADE.  249 

be  preferred  to  an  argument.  Have  you  any  objection  to  these 
monopolies  ? 

I).  I  am  not  engaged  with  this  sort  of  analogies. 

T.  Then  you  should  not  provoke  them  by  indefinite  and  vague 
epithets  in  a  general  charge  of  inequality. 

D.  If  your  reply  can  serve  any  other  purpose  than  a  rebuking 
criticism  of  a  phrase,  improve  it  by  applying  it  to  the  specifications 
which  it  is  plainly  meant  to  cover. 

T.  Right.  Your  rejoinder  is  direct  to  the  purpose  and  to  the 
point  in  hand.  Equally  direct  and  plump  as  are  the  applica- 
tions of  the  analogies  used,  I  say  that  if  I  lend  money  to  one  man 
who  will  use  it  to  give  employment  to  a  hundred  laborers  in  work 
that  affords  a  support  to  them  and  to  their  families,  I  have  in 
effect,  if  not  in  purpose,  conferred  the  benefit  upon  the  whole 
hundred  and  one,  and  their  dependents,  in  proportion  to  their  sev- 
eral abilities  to  avail  themselves  of  it ;  and  I  have  not  limited  its 
advantages  to  that  one  who  is  thus  made  a  conduit  of  a  general, 
though  graduated,  supply.     I  have  not  made  a  monopolist. 

D.  But  suppose  that  the  distributing  agent  of  your  bounty  is 
one  of  the  class  of  great  manufacturers,  and  your  helpful  fund  is 
confined  to  his  employes ;  and  further,  suppose  that  you  are  per- 
sonating the  common  government;  has  not  your  beneficence  the 
limitation  and  exclusiveness  of  a  favor  to  a  class,  and  so  become 
fairly  liable  to  the  charge  of  partiality  and  inequality  of  remedial 
measures,  if  such  charities  may  be  allowed  that  character  ? 

T.  You  have  put  me  into  the  hardest  position  to  maintain,  by 
likening  the  favor  conferred  to  the  system  of  bonuses  accorded  in 
the  olden  time,  or  the  earlier  time,  for  the  encouragement  of  in- 
dustrial enterprise, — such  as  that  adopted  by  Colbert,  the  great 
financial  minister  of  Louis  XIV.  He  gave  directly  from  the  im- 
perial treasury  two  thousand  livres  ($400)  to  each  loom  put  to 
work,  for  the  purpose  of  establishing  the  textile  manufactures  of 
France,  and  to  which,  by  the  way,  they  owe  their  origin  and 
great  success  then  and  ever  since.  The  like  policy  has  been,  in 
a  multitude  of  instances,  followed  by  the  governments  of  Western 
Europe,  and  has  mainly  contributed  to  the  superiority  they  have 
achieved  over  their  Asiatic  rivals.  But  this  policy,  however  recom- 
mended and  justified  by  its  necessity  in  the  circumstances,  proved 
17 


250  POLITICAL   ECONOMY. 

to  be  liable  to  abuse,  and  was,  under  the  favoritism  of  govern- 
ments, so  greatly  abused  that  it  has  fallen  into  general  reproba- 
tion. It  was  perverted  into  monopolies,  and  class  and  individual 
favoritism.  Such  perversion  is  only  a  good  objection  against  a 
principle  specially  liable  to  it.  Nevertheless  even  in  such  cases, 
the  rule  still  holds  that,  "  if  one  member  of  the  body  be  honored, 
all  the  other  members  rejoice  with  it." 

The  policy  is  still  allowed  under  cover  of  some  sheltering  justi- 
fication, such  as  subsidies  in  the  guise  of  contracts  for  carrying 
the  mails  at  sea,  or  gifts  of  public  lands,  and  the  loan  of  the  na- 
tional credit  to  railroad  corporations  for  carrying  the  mails,  and 
for  military  transportation  across  the  deserts  and  over  the  Rocky 
Mountains  of  the  United  States.  These  are  in  effect,  and  indeed 
in  intention,  bonuses,  equivalent  to  money  paid  out  of  the  public 
treasury  in  support  of  enterprises  that  are  warranted  by  the  im- 
perious necessity  for  government  intervention, — the  expenditure 
looking  wisely  and  impartially  to  the  diffusive  beneficence  of  the 
grant.  A  nation,  being  in  its  welfare  an  unit,  is  as  much  inter- 
ested in  a  fort  on  its  frontier,  a  man-of-war  on  the  ocean,  as  in  a 
railroad  in  its  centre.  The  stomach  does  not  engross  the  food 
which  it  receives  ;  the  common  circulation  distributes  it  in  due 
proportion  to  every  member  of  the  integral  body. 

These  examples,  however,  are  not  such  instances  of  the  pro- 
tective policy  as  are  directed  absolutely,  and  made  securely  ope- 
rative, beyond  the  peradventure  or  misadventure  to  which  bonuses 
in  form  are  exposed. 

I).  I  concede  the  utility  of  bonuses  that  are  indispensable  in 
aid  of  public  improvements  and  defences  otherwise  impracticable  ; 
but  I  stand  upon  my  objections  to  legislative  interference  in  the 
pursuits  of  private  business  affairs,  through  the  infliction  of  the 
burdens  and  restrictions  of  the  protective  system. 

T.  I  infer  that  you  allow  special  legislation,  favors,  and  grants, 
not  only  because  their  objects  are  impracticable  without  such  aid 
and  exclusiveness  of  privilege,  but  because  they  are  required  by 
the  common  interest  of  the  whole  people,  and  are  prospectively 
impartial  by  a  ratable  distribution  of  benefits  upon  the  community. 
I).  Of  course  it  is  the  ultimate  operation  and  effect  of  any 
special  grant,  whether  it  is  a  railroad,  a  passenger  ship,  or  a 


INTERNATIONAL   TRADE.  251 

patentee,  or  any  other  contributor  to  public  and  common  benefit, 
that  takes  it  out  of  the  category  of  unwarrantable  class  legislation. 
T.  That  is  all  I  ask  or  need  upon  our  main  point.  But,  before 
I  apply  it  to  the  law  of  import  duties,  prohibitions,  and  embar- 
goes, I  must  endeavor  to  settle  an  intrinsic  question,  in  order  to 
prevent  its  obstructive  interference  with  the  progress  of  the  dis- 
cussion which  we  are  engaged  with. 

D.  We  had  better  have  it  as  an  episode  than  a  muddle.  What 
is  it  ? 

T.  You  will  find  it  in  this  proposition :  Protection  is  not  taxa- 
tion in  its  spirit,  purpose,  principle,  or,  in  its  operation. 

I).  Maintain  this  proposition  and  you  muzzle  your  antagonists, 
for  their  argument  is  a  complaint,  rather  than  a  policy,  resting 
upon  its  own  merits,  although  sufficiently  strong  in  that  attitude 
to  the  debate.  It  is  a  rebellion  against  a  tyranny,  and  has  its 
justification  in  its  injuries.  Free  trade  antagonizes  protective 
duties  as  burdens,  pure  and  simple,  imposed  upon  consumption. 
If  import  duties  are  not  truly  taxes,  they  must  rest  on  other 
grounds,  and  must  be  judged  by  their  difference  of  working  prin- 
ciples and  objects.  So  much  is  fairly  conceded  to  the  assumption, 
provided  the  assumption  be  supported  by  fact. 

T.  First:  Protective  charges  upon  foreign  imports  avow  a 
purpose  totally  different  from  taxation. 

Secondly :  They  have  a  totally  different  rule  of  assessment. 
Thirdly  :  They  have  no  respect,  and  bear  no  relation  whatever, 
to  the  value  of  their  subjects,  and  in  this  respect  differ  world-wide 
from  the  rule  of  taxation  for  the  purpose  of  government  revenues, 
and  for  this  reason  ad  valorem  assessments,  beside  their  other 
criminalities,  are  utterly  alien  to  the  protective  principle. 

Fourthly :  They  have  no  arbitrary  or  constant  rates  of  assess- 
ment. Being  strictly  and  only  remedial  in  their  use,  they  adapt 
themselves  to  their  own  necessities  ;  and  although  they  afford,  or 
may  afford,  incidental  service  to  the  national  revenue,  this  is  not 
their  design,  and  they  are,  therefore,  not  regulated  by  the  require- 
ments of  national  income  and  expenditure. 

In  all  these  points  of  character  and  purpose  they  differ  from 
government  taxes,  which,  distinctively,  are  contributions  levied 


252  POLITICAL   ECONOMY. 

upon  persons  and  property  for  the  necessary  supply  of  the  nation's 
expenses. 

Blackstone,  who  scarcely  ever  fails  in  logical  definitions,  or 
descriptions  of  things  by  their  kind  and  difference  from  other 
things,  and  as  carefully  excludes  all  that  does  not  belong  to  them, 
says  :  "  Tax  is  a  rate  or  sum  of  money  assessed  on  the  person  or 
property  of  a  citizen  by  government  for  the  use  of  the  State,  and 
is  usually  levied  upon  the  property  of  citizens  according  to  their 
income  or  the  value  of  their  estates."  Here  we  have  the  nature 
and  purpose,  and  thence  the  governing  rules  of  taxation. 

The  grand  difference  of  protection  proper  is  given  by  Webster 
as  "  defence,  shelter  from  evil,  preservation  from  loss,  injury,  or 
annoyance." 

Protective  duties  may  result  in  revenue  to  the  government,  or 
they  may,  by  prohibitive  rates,  yield  nothing  to  it. 

D.  Imposts  upon  foreign  merchandise  are  usually  commended 
for  the  revenue  which  they  yield  ;  and  it  is  claimed  for  them  that, 
in  this  way,  they  exempt  from  burdens  personal  and  real  property 
to  the  amount  which  they  yield  for  the  general  service.  Customs, 
in  our  country,  have  been  more  than  nine-tenths  of  the  national 
income.  If  they  are  not  taxes  in  character  and  method  of  assess- 
ment, they  certainly  fall  upon  the  consumers  of  imports  exactly 
as  internal  excises  do. 

T.  Must  I  ask  you  to  notice  that  very  different  agents,  under 
very  different  laws  of  object  and  operation,  may  have  effects  in 
some,  or  most,  or  all  respects,  alike.  A  storm  of  wind  and  wave 
destroys  a  ship  ;  so  does  a  cannonade.  Are  they,  therefore,  iden- 
tical in  theory  and  in  operation  ? 

Let  me  try  to  impress  differences,  under  such  resemblances  as 
you  suggest.  Protection  aims  at,  and  addresses  all  its  methods 
and  measures  to  the  defence  of  the  industries  employed  in  the 
domestic  production  of  commodities,  and  has  nothing  to  do  with 
their  market  value.  It  confronts  the  importer  with  its  purpose  to 
secure  the  interests  of  domestic  capital  and  labor,  by  equalizing 
their  opportunities  against  all  odds  ;  and  it  lays  on  any  amount  of 
duty  that  will  do  that.  As  an  illustrative  example  :  the  Prussian 
Zolverein,  in  its  best  and  most  effective  form,  was  purely  protect- 
ive.    Originally  it  charged  cotton  goods,  without  any  regard  to 


INTERNATIONAL    TRADE.  253 

quality,  thirty-two  dollars  and  twenty-five  cents  upon  every  hun- 
dred weight  of  the  fabrics  imported.  The  effect  of  this  specific 
duty  was,  that  coarse  shirting  paid  the  equivalent  of  90  per  cent, 
upon  its  invoice  value  or  price  ;  superior  shirting  paid  only  32J 
per  cent. ;  and  fine  printed  cottons  were  admitted  at  8|  per  cent, 
(specifics  reduced  to  ad  valorem).  The  Zolverein,  or  customs 
union,  of  above  thirty  German  States,  intended  protection  and 
not  revenue  from  foreign  trade  in  the  goods  which  competed  with 
their  own  industries.  They  intended  to  foster  their  own  manufac- 
tures in  their  infancy.  Their  policy  had  no  regard  to  the  result- 
ing revenue.  It  did  not  tax  those  goods  which  its  capital  and 
labor  were  not  yet  able  to  produce.  It  defended  only  those  of 
which  the  people  were  then  capable.  It  put  no  greater  burden 
upon  the  finest  and  costliest  than  something  like  mere  port-charges. 
On  the  same  principle,  and  guided  by  the  same  purpose,  it  charged 
all  kinds  of  cutlery  at  a  uniform  rate  by  the  pound  ;  letting  in 
pen-knives,  razors,  gold  epaulettes,  and  along  with  them,  china 
wares  ;  at  a  merely  nominal  rate,  because  they  did  not  then  (in 
the  year  1818)  compete  with  any  home  production  ;  and  they  laid 
their  whole  protective  stress  upon  such  rivals  as  hatchets,  axes, 
and  the  coarser  metallic  wares,  which  the  German  people,  under 
the  shelter  of  equalizing  duties,  were  able  to  make  for  themselves. 
You  see  there  is  nothing  of  the  law  of  taxation  in  charging  a 
razor  and  a  plow-share  or  a  crow-bar  at  the  same  rate  of  import 
duty  per  pound. 

I  wish  that  I  could  make  a  free-trader  understand  this.  The 
results  of  the  Prussian  system  took  care  of  its  intention.  With- 
out any  change  in  its  rates,  as  the  people  advanced  in  skill 
and  capability,  they  found  the  unchanged  rates  at  each  successive 
stage  sufficiently  protective,  though  constantly  declining  in  ratio 
to  values,  until,  in  the  end,  German  cutlery  attained  such  rank  in 
quality  and  price  that  it  obtained  a  remunerative  market  at  home 
and  even  in  England. 

So  Germany,  under  an  unadulterated  protective  system,  grew 
out  of  its  infancy  in  the  manufacturing  arts  to  a  maturity  which 
has  made  an  empire  out  of  the  previously  existing  fragments  of 
nationalities.  And,  let  me  add,  that  every .  people  in  Europe 
which  has  in  modern  times  emerged  from  helplessness  into  the 


254  POLITICAL   ECONOMY. 

rank  of  a  power  among  the  nations,  has  a  like  history  of  its  ways 
and  means  of  acquiring  industrial  and  political  independence. 

I).  Is  that  Prussian  system  an  example  of  righteousness  which 
thus  refused  to  graduate  the  burdens  which  it  imposed  to  the  abil- 
ity of  the  consumers,  making  no  distinction  between  the  common 
necessaries  of  life  and  the  luxuries  of  the  rich,  but  rather  dimin- 
ishing duties  in  inverse  proportion  to  ability  to  bear  them  ? 

T.  Be  careful  of  the  distinction  between  internal  taxes  and 
duties  upon  foreign  imports.  Of  necessity  as  well  as  in  equity 
internal  taxes  are  charged  upon  property  in  the  ratio  of  assessed 
values  ;  but  imposts  having  a  totally  different  aim  are  levied  under 
a  totally  different  rule. 

The  Zolverein  had  nothing  of  the  nature  of  sumptuary  laws  in 
its  provisions.  It  drew  no  line  of  partition  between  luxuries  and 
common  necessaries.  It  did  not,  by  adding  to  the  cost  of  finery, 
put  it  still  further  out  of  the  reach  of  the  poor  (for  I  believe  the 
word  luxury  is  applied  to  all  things  that  are  comparatively  costly, 
and  to  no  others).  Those  which  are  lawful  indulgences  and  refin- 
ing in  their  use,  are  not  persecuted  by  the  policy  that  is  simply 
and  justly  protective  of  domestic  industry.  That  discrimination 
among  classes  belongs  to  your  "  tariff  for  revenue  only,"  which 
taxes  its  subjects  according  to  their  market  value. 

I).  You  are  admitting  that  custom-house  duties  have  no  moral 
ends  in  view,  and  have  no  respect  to  the  ability  of  taxables. 

T.  The  proper  regulation  of  imports  in  foreign  trade  has  its  own 
ends  to  promote,  and  does  not  encumber  itself  with  a  lien  of  issues. 
It  leaves  sanitary  laws,  police  regulations,  war  and  peace,  and 
ecclesiastical  functions,  in  the  hands  appointed  to  administer  them ; 
and  it  never  permits  their  interference  with  its  economical  offices. 
In  homely  phrase,  it  minds  its  own  business,  and  leaves  every 
other  function  of  society  to  the  undisturbed  performance  of  its 
special  duty.  For  an  example  of  its  avoidance  of  trespass  upon 
any  other  province  than  its  own,  it  would  never  be  guilty  of  putting 
tea  and  coffee  into  the  aristocratic  rank  of  luxuries  by  charging, 
say  5  cents  import  duty  on  a  pound  of  the  one,  and  GO  cents  upon 
the  best  quality  of  the  other,  after  the  free  trade  notion  of  a  tariff 
for  revenue.  In  the  day  of  its  strength  and  at  the  first  moment 
of  its  great  victory  over  the  unwisdom  of  that  disastrous  doctrine, 


INTERNATIONAL   TRADE.  255 

our  tariff  of  1832  put  coffee  and  tea  into  its  free  list,  and  it  has 
always  followed  that  rule  when  disembarrassed  of  the  necessity  of 
re^ardinsr  revenue  in  the  exigencies  of  the  national  necessities. 

D.  Are  you  not  claiming  a  consequence  of  free  trade  as  a 
property  of  protection,  by  citing  such  instances  as  have  at  any 
time  been  liberated  from  import  duties  ? 

T.  How  slow  you  are  to  understand  the  spirit  as  well  as  the 
borly  of  protection,  or,  how  inadequate  has  been  my  explanation  of 
it !  My  clear  sir,  if  import  duties  were  taxes,  a  free  list  in  its  pro- 
visions would  be  a  solecism.  Must  I  so  often  remind  you  that  it 
is  a  defence  of  native  industry,  and  nothing  else  ?  The  free  ad- 
mission of  goods  which  in  no  wise  displaces  home  labor,  but  rather 
promotes  its  prosperity,  is  one  of  its  controlling  principles.  It  is, 
therefore,  consonant  with  and  obligatory  upon  it,  to  guard  the 
home  market.  Thus,  where  it  protects  the  farmer's  products  from 
the  rivalry  of  Canada,  it  exempts  from  duty  all  foreign  wool 
which  is  coarser  than  our  climate  yields.  This,  at  least,  is  re- 
quired by  its  principles  and  policy. 

D.   Please  explain  this  seeming  incongruity. 

T.  There  is  a  vast  quantity  and  value  of  blanketing  and  cheap 
woollen  clothing  in  demand.  Our  manufactories  cannot  supply 
these  low-priced,  but  excellent  stuffs,  from  our  own  wool,  which  is 
worth  from  40  to  60  cents  per  pound  ;  but  by  mixtures  with  the 
South  American  wool,  costing  about  7  cents,  they  can  be  made 
and  marketed  for  home  consumption.  Our  own  wool  never  goes 
across  the  ocean  in  quantity  sufficient  to  pay  for  even  the  playing 
cards  which  we  import.  It  has,  for  reasons  which  I  cannot  stop 
to  explain,  no  foreign  market  approaching  our  capability  of  pro- 
duction. England  admits  the  low-priced  raw  materials  free  of  duty, 
and  by  underselling  us,  shuts  up  our  production,  closes  the  factories 
depending  upon  it,  and  our  sheep  go  to  the  shambles.  This  tax 
upon  non-competing  wools  makes  mutton  cheap,  and  our  own  wool 
too  cheap  to  bear  cultivation. 

P.  It  seems  to  me  that  the  true  system  of  protection  thus  pre- 
sented is  full  of  scientific  harmonies.  Its  apparent  complexities 
are  systematically  reconcilable.  Do  you  claim  for  it,  as  we  have 
had  it,  the  merit  of  giving  us  the  industrial  eminence  we  have 
reached  ? 


256  POLITICAL  ECONOMY. 

D.  I  should  not  be  surprised  if  he  claimed  for  the  darling  sys- 
tem, all  our  triumphs  in  war  and  peace,  the  vast  expansion  of  our 
territory,  and  income  of  our  population,  and  many  another  won- 
drous achievement  that  certainly  has  had  some  other  causes  of 
success  in  the  growth  of  national  wealth  and  power. 

T.  Then  I  shall  not  surprise,  however  much  I  may  astonish 
you,  when  I  say  that  the  nursing  of  a  nation's  infancy,  and  the 
care  of  a  wise  guardianship  of  its  material  interests  are  quite  as 
essential  to  its  health  and  growth  as  are  its  constitutional  princi- 
ples of  political  government.  We  know  that  no  civilized  people, 
within  the  range  of  authentic  history,  has  risen  to  independence, 
wealth,  and  power,  that  have  neglected  the  protection  of  their  in- 
dustries with  a  care  beyond  their  common  international  concerns  ; 
and  we  know  that  since  the  inauguration  of  the  chemical  and 
mechanical  auxiliaries  in  industrial  production,  no  nation  that  held 
a  high  rank,  two  or  three  hundred  years  ago,  and  has  abandoned 
its  manufacturing  interests  to  hap-hazard,  or  to  free  trade,  has 
been  able  to  maintain  equality  with  those  to  whom  it  has  surren- 
dered the  management  of  its  labor  and  productive  capabilities. 

D.  Does  not  the  still  more  modern  abandonment  of  the  pro- 
tective policy,  in  the  more  advanced  countries,  show  that  wealth 
and  prosperity,  in  all  their  forms,  go  better  unsupported  and  unin- 
cumbered by  the  crutches  of  protection  ;  in  a  word,  that  "  time 
has  made  the  ancient  rule  uncouth,"  and  that  "we  cannot  open 
the  future's  portal  with  the  past's  blood-rusted  key"  ? 

T.  I  think  that  only  the  instrumentalities  have  been  accom- 
modated to  the  new-time  requirements,  or  that  their  spirit  has  been 
transmigrated  into  more  fitting  organisms,  as  their  older-time 
specially  adapted  forms  died  heroically  in  the  arms  of  victory. 
Defences  are  not  to  be  kept  armed  and  equipped  when  they  have 
conquered  peace.  They  must  be  maintained  for  their  exigent 
uses  only. 

It  is  not  becoming  in  a  convalescent  to  depreciate  the  splints 
and  bandages  because  they  encumbered,  while  they  supported,  his 
broken  limb  through  the  healing  process.  They  are  obsolete  now 
to  him  ;  but  it  is  monstrous  of  him  to  declare  that  the  bone  healed 
itself  in  spite  of  the  remedial  appliances.  England,  finding  pro- 
tection by  her  present  contemporaries  an  obstacle  to  her  industrial 


INTERNATIONAL    TRADE.  257 

and  commercial  domination  of  the  outside  world,  apologizes  for  the 
founders  of  her  prosperity,  and  calls  their  wisdom  and  providence 
a  mistake.  She  made  herself  the  workshop  of  the  world  and 
mistress  of  the  seas  by  impositions  and  prohibitions,  enforced  by 
penalties,  ruthless  and  frightful ;  but  now  she  endeavors  to  hold 
the  vantage  ground  so  gained  by  breaking  down  the  like  defences 
of  the  nations  against  her  aggressions,  actual  and  possible. 

D.  As  against  injurious  foreign  competition  your  doctrine  has 
some  force.  But  in  practice  it  is  an  unwarrantable  interference 
with  the  private  right  of  self-government,  and  free  selection  and 
pursuit  of  business  avocations.  It  assumes  to  decide  the  people's 
industrial  destinies  without  consulting  their  preferences  of  taste 
and  capability.  It,  in  effect,  says  to  fifty  millions  of  people  in  the 
United  States,  "  You  don't  understand  your  own  interests  as  well, 
and  are  not  as  fit  to  manage  your  own  private  business,  as  a  couple 
of  hundred  congressmen  are." 

T.  Free  trade  seems  to  deal  in  nothing  but  abstractions.  It 
takes  inferences  for  its  data,  and  does  all  its  reasonings  upon  the 
postulates  of  its  own  manufacture  ;  like  John  Stuart  Mill's  notion 
of  political  economy,  "  it  is  founded  upon  abstractions,  not  upon 
facts  ;"  and,  thus  having  the  start  of  beginning  at  the  outpost,  it 
compels  the  antagonist  to  run  backwards  in  the  race  which  it 
challenges. 

We  had  to  meet  the  class  legislation  cry  as  one  of  our  side 
issues  ;  then  inequality  of  taxation  as  another ;  and  now  we  are 
put  upon  another,  by  the  interjection  that  protection  of  the  com- 
mon interests  of  the  community  must  necessarily  interfere  with 
personal  liberty  in  the  choice  of  industrial  pursuits. 

There  is  a  conspicuous  fallacy  in  the  assumption  that  every 
man  is  so  wise  that  he  needs  no  guardianship,  which  I  do  not 
expect  you  to  press  upon  me.  Moreover,  it  is  so  impertinent  in 
this  debate  that  it  has  nothing  of  its  intended  consequence  even  if 
it  were  admitted.     It  is  a  shot  entirely  wide  of  the  mark. 

Protection  is  so  far  from  tending  to  limit,  confine,  or  control 
self-government  in  the  choice  of  business  avocations  that  its  only 
aim  and  intention  is  to  secure  the  conditions  and  opportunity  of  a 
free,  wide  range  of  choice,  large  enough  in  its  provisions  for  the 
liberty  of  every  taste  and  capability.     It  is  best  described  as  a 


258  POLITICAL   ECONOMY. 

system   of  free   domestic    commerce,  in   opposition    to    the    free 
foreign  trade,  which  would  cripple  it. 

I).  Would  you  controvert  that  battle-cry  of  freedom,  "  The 
world  is  governed  too  much  ;"  and  its  corroboration  and  exponent, 
"  It  is  astonishing  with  how  little  wisdom  the  world  is  governed"  ? 

T.  It  is  more  astonishing  that  such  empty  generalities  should 
become  the  fundamental  principles  of  theory  concerning  practical 
affairs.  If  I  must  argue  the  necessity,  from  the  universality  of 
government  intervention  in  private  affairs,  I  could  adduce  such 
instances  as  these  :  Legislation  in  regard  to  corporations,  banks, 
brokers,  auctioneers,  canals,  railways,  artificial  roads,  mechanics' 
liens,  apprenticeships,  market  inspections,  patent  rights,  copy- 
rights, hours  of  labor,  cruelty  to  children,  licenses,  enabling  and 
restraining,  forms  of  conveyances  of  property,  coinage,  weights 
and  measures,  insolvency,  intestacy,  legal  tender  in  payment  of 
debts,  partnerships,  trusts,  poor  laws,  school  laws,  election  laws, 
marriage,  sanitary-  laws,  police  laws,  militia  laws,  post-offices, 
infancy  and  maturity  of  age,  damages  in  compensation  for  loss  of 
life  or  limb,  the  law  of  common  carriers,  with  a  long  train  of  other 
interferences  in  private  business  affairs  too  numerous  to  detail.  In 
all  of  which  the  incompetence  of  individual  wisdom  or  power  in- 
vites government  regulation  and  protection,  limited  only  by  the 
line  where  individual  capability,  convenience,  and  security  mark 
the  proper  division  of  the  public  from  the  private  functions  of 
societary  life. 

D.  I  need  go  no  further  in  reply  to  such  a  string  of  refractory 
instances  as  you  have  produced,  than  that  there  are  exceptions  to 
every  rule. 

T.  Which,  if  true,  forbids  the  application  of  the  rule  to  the 
exceptions  ;  especially  when  they  are  more  numerous  than  the 
examples  ;  for,  exceptions  instead  of  supporting  the  rule  directly 
contradict  and  flatly  refuse  submission  to  it.  Besides,  let  me  re- 
mind you  that  the  proverb  which  you  quote  is  only  the  dodge  of  a 
manifest  untruth,  at  best.  It  means  "  I  am  right  except  when  I 
am  wrong." 

P.  Shall  we  return  now  to  the  direct  development  of  the  pro- 
tective theory — its  vindication  from  the  charge  of  limiting  its  in- 
tended benefits  to  its  first-hand  beneficiaries — the  employers  and 


INTERNATIONAL    TRADE.  259 

employees,  with  their  immediate  dependants,  to  whom  it  grants  its 
favors  ? 

I).  If  I  understand  the  argument,  the  escape  from  the  charge 
of  monopoly  and  inequality  at  the  expense  and  to  the  injury  of  all 
outside  of  the  privileged  parties,  is  to  be  found  in  the  ultimate 
distribution  of  its  favoritism  or  its  advantages,  to  the  whole  com- 
munity without  partiality. 

T.  Nothing  less  or  other  than  a  fair  and  determinate  tendency 
to  universality  of  beneficence  can  justify  any  aid  given  through 
any  special  channel.  It  must  not  even  ask  the  indulgence  of  that 
invidious  maxim — "the  greatest  good  to  the  greatest  number," 
which,  by  the  way,  authorizes  the  oppression  of  the  minority  for 
the  undue  advantages  of  the  majority. 

I).  I  confess  that  I  did  not  expect  such  a  downright  radicalism 
of  doctrine  in  so  bald  a  system  of  conservatism  as  you  propose  to 
defend. 

T.  A  true  system  of  social  science,  in  all  its  branches,  repu- 
diates the  poetic  heresy  of  "  educing  from  partial  evil,  universal 
good,"  as  indignantly  as  St.  Paul  denounces  "  the  doing  of  evil 
that  good  may  come." 

We  submit  our  policy  to  judgment  under  requirements  so  rigid 
as  these  ;  and  intending  none  of  the  dodges  of  a  compromise 
democracy,  we  ask  no  favors  from  its  hermaphrodite  philosophy, 
made  up  of  the  most  malignant  elements  of  prerogative  mixed 
with  the  silliest  aphorisms  of  demagoguery  ;  which  I  take  to  be 
a  true  analysis  of  free-trade.  There  is  a  generality  for  you  ;  for 
I  owe  you  one. 

D.  I  think  that  is  overmuch  to  say  of  a  doctrine  held  and 
avouched  by  the  most  advanced  minds  of  the  time. 

T.  The  most  advanced  !  Say  the  most  protruded,  and  illustrate 
the  simile  by  the  highest  heads  of  the  tallest  stalks  of  a  grain-field, 
overtopping  those  which  have  something  in  them  which  imposes  an 
attitude  more  modest. 

D.  Poetry,  imagery,  borrowing  all  its  strength  of  argument 
from  sampler  analogies ! 

T.  Truth  may  in  its  earnestness  and  fervor  rise  to  the  tone  of 
verse  without  any  compliment  except  to  the  heart  of  the  utterer. 
I  have  not  assailed  the  motives  or  the  morals  of  the  enemy ;  be- 


260  POLITICAL   ECONOMY.       • 

cause  I  know  that  many  of  them  are  innocents.  I  have  better 
weapons  for  offence  and  defence  than  opprobrious  epithets.  That 
is  the  ammunition  of  the  other  party. 

D.  Do  they  skirmish  with  poisoned  shot?  I  was  not  aware 
of  it. 

T.  Sturdy  beggars,  robbers,  monopolists,  money  lords,  conspir- 
ators, are  among  the  terms  common  to  the  doctrinaires  of  the 
party  ;  to  which,  by  way  of  climax,  protectionists  are  plainly  told 
that  they  are  fools,  dotards,  and  bigots,  as  blind  to  their  own 
interests  as  they  are  reckless  of  the  rights  of  others  ;  with  all 
that  is  odious  in  the  masterdom  of  capital,  all  that  is  wicked  in 
speculation,  and  cowardly  and  cruel  in  riding  rough-shod  over  the 
barefoot  crowd  in  the  thoroughfare  of  life's  journey.  Have  you 
not  noticed  anything  of  this? 

D.  Well,  yes.  In  the  feebler  newspaper  editorials,  and  in 
stump  speeches  of  the  incapables  ;  but  can  you  find  one  instance 
of  the  offence  among  those  for  whom  the  discipleship  is  justly 
responsible  ? 

T.  One  instance,  only  one  !  I  take  the  readiest  at  hand,  and 
the  easiest  of  access.  William  Chambers,  in  "  a  manual  prepared 
for  the  use  of  schoolmasters,  tutors,  governesses,  and  parents," 
entitled,  "  Historical  and  Miscellaneous  Questions  with  Answers," 
sums  up  his  catechism  for  the  innocents  thus :  "  In  plain  lan- 
guage, protection  in  trade  is  little  better  than  public  robbery." 
Will  that  do  for  one  instance  ?  You  may  have  another :  the 
grandson  of  John  Quincy  Adams  ventures  boldly  upon  the  same 
charge  in  the  like  terms,  although  his  grand  ancestor  is  thereby 
laid  open  to  the  accusation !  In  fact,  the  retailers  of  the  creed  in 
our  own  country,  generally,  without  respect  to  persons  or  opinions, 
though  they  be  represented  by  such  persons  as  Washington,  Jef- 
ferson, Madison,  and  Hamilton,  use  such  terms  of  obloquy  as 
freely  and  as  unreservedly,  as  if  they  were  addressing  themselves 
to  a  street  mob,  "  for  the  greatest  good  of  the  greatest  number" 
of  voters,  and  as  careless  of  the  laws  of  logic  which  rule  the 
greatest  thinkers,  and  at  the  same  time,  gentlemen  entitled  to 
respect. 

I).  Faults  in  the  advocacy  of  principles  in  issue !  But  the 
question  is,  in  essence,   the   reserved  rights  and  liberty  of  the 


INTERNATIONAL    TRADE.  261 

people,  which  need  definition  and  defence.  These  are  the  sources 
of  public  danger.  It  is  the  domination  of  the  persons  in  power, 
in  the  administration  of  the  common  interests,  that  is  commonly 
in  the  aggressive.  All  the  reformations  of  history,  in  Church  and 
State,  have  been  branded  as  rebellious,  simply  because  they  are 
the  resistance  of  the  wronged  many  to  the  usurpations  of  the  few. 
"  Eternal  vigilance  is  the  price  of  freedom  ;"  and  the  value  of 
liberty,  after  your  notion  of  the  value  of  commodities,  is  the  cost 
of  its  production  and  constant  reproduction  and  maintenance.  It 
is  the  invasion  of  individual  liberty  by  obstructive  interference  ; 
it  is  the  watchful  and  jealous  prohibition  of  executive  intrusion 
upon  private  rights,  which  has  consecrated  the  maxim,  k'  that 
government  is  best  which  governs  least." 

T.  Another  generality,  tipped  with  an  antithesis,  as  lightning 
rods  are  defended  from  the  melting  fire  which  they  invite  by 
infusible  points, — conductors  of  the  clouds  they  point  at. 

But  political  government  has  two  aspects,  each  essential  to  the 
other — control  and  protection.  A  social  deism  and  a  social  provi- 
dence, when,  in  any  worthy  sense,  it  is  a  human  copy  of  the 
Divine  ;  that,  to  the  utmost  possibility  of  its  power,  it  may  do 
His  will  on  earth  as  it  is  done  in  heaven,  "  causing  its  sun  to  rise 
on  the  evil  and  on  the  good,  and  sending  its  rain  upon  the  just  and 
on  the  unjust."  The  interferences  of  a  rule  which  respects  lib- 
erty, while  it  provides  for  and  defends  its  exercise. 

If  democracy  be  not  political  atheism,  it  must  accept  this  union 
of  supervision  and  sustentation  ;  that  is,  if  it  be  not  the  pure 
democracy  which  Jefferson  "calls  the  devil's  own  government." 

D.  Democracy  is  not  lawlessness.  It  authorizes  government; 
but  it  insists  that  it  shall  be  self-government ;  that  not  a  part  shall 
govern  the  whole,  but  that  the  whole  shall  govern  the  parts  ;  re- 
straining, maintaining,  and  protecting  them  equitably,  wisely,  and 
beneficially.  Otherwise  it  would  be  only  a  creed  of  rebellion, 
and  not  a  policy  of  civil  government. 

T.  But  it  has  been  generally  so  busy  pulling  down  Babylon 
that,  by  force  of  habit  and  the  impulse  of  its  dogmas,  it  gives  less 
attention  to  building  up  Jerusalem.  It  carries  its  war-cries  into 
the  dominion  of  peace.  Its  instincts  are  always  prohibitory. 
Ever  crying,  "  Thou  shalt  not,  thou  shalt  not,"  to  the  constituted 


262  POLITICAL   ECONOMY. 

authorities,  hardly  conceding  any  force  to  "  thou  mayest,"  "  thou 
shouldst."  It  demands  abdication,  instead  of  the  performance  of 
any  duty,  except  repeal.  It  requires  the  administration  to  cease 
to  do  evil,  but  does  not  insist  upon  learning  to  do  well.  The  motto 
which  you  quote,  practically  rendered,  means, — Do  next  to  noth- 
ing ;  and  nothing  at  all,  by  the  same  rule,  would  be  still  better. 

To  meet  and  avert  the  mischiefs  of  this  insane  individualism, 
let  us  look  at  the  requirements,  as  well  as  at  the  limitations,  which 
the  government  of  a  commonwealth  imposes  upon  its  functionaries. 
The  diversity  of  capability,  taste,  talents,  aims,  and  objects  of  the 
multitude  whose  fortunes  are  at  stake  is  so  great,  so  multitudinous 
that,  as  hardly  any  two  people  are  in  anything  alike,  so  their 
fitting  avocations  are  infinitely  diversified. 

Our  last  census  (of  1870)  gives  a  list  of  338  occupations  of  the 
people  known  by  distinctive  names.  The  Superintendent  notices 
the  obvious  deficiency  by  saying  that  it  is  not  possible  for  the 
enumerators  to  fill  two  or  three  thousand  subdivisions  with  appro- 
priate entries  ;  and  he  is  fully  aware  that  a  large  number  of  those 
that  are  designated  include  a  considerable  variety  of  businesses 
under  a  single  description  ;  and,  to  the  unlimited  conglomeration 
under  the  titles  given,  we  must  add  a  multitude  of  others  not 
given,  for  if  seven  or  eight  workmen  are  employed  in  making  a 
pin,  and  perhaps  a  thousand  in  the  production  of  a  daily  news- 
paper, we  may  as  well  say  of  most  of  the  occupations  under  a 
single  name,  midtum  in  parvo,  and  so  give  up  any  attempt  at 
estimation. 

D.  This  proposition  does  not  need  amplification.  To  what  does 
it  tend  ? 

T.  It  tends  to  teach  and  enjoin  a  commensurate  diversification 
of  employments,  adequate  in  adapted  variety  to  the  latent  pro- 
ductive powers  of  the  whole  people. 

P.  There  it  is  in  a  nutshell.  But  the  idea  is  so  vast  that  the 
specifications  which  it  embraces  would  help  to  the  better  appre- 
hension of  it. 

T.  A  largely  comprehensive  assortment  of  labor  requirements 
by  one  class  of  the  people,  dependent  on  their  industries,  otters 
itself,  importunate  for  consideration. 

Without  a  very  great  variety  of  productive  occupation,  one-half 


INTERNATIONAL   TRADE.  263 

of  the  population — our  women — must  be  put  into  the  "  supported 
class,"  or  driven  into  unsuited  drudgery.  The  modern  system  of 
manufacturing  has  taken  from  the  household  the  spinning-wheel, 
the  hand-loom,  and  the  knitting-needle,  in  money-earning  service. 

In  1791,  Alexander  Hamilton,  then  Secretary  of  the  Treasury, 
officially  reported :  "A  vast  scene  of  household  manufactures," 
which,  not  then  being  displaced  by  steam  and  machinery,  as  they 
since  have  been,  he  says,  "  supplied  in  different  districts  two- 
thirds,  three-fourths,  and  even  four-fifths  of  all  the  clothing  of  the 
inhabitants."  Of  textile  fabrics  he  says:  "In  several  kinds  the 
domestic  fabrication  was  not  only  sufficient  for  the  families  them- 
selves, but  for  sale,  and  to  such  extent  in  some  cases  that  they 
were  exported  to  foreign  countries." 

This  field  of  self-supporting  work,  which  was  in  the  hands  of 
our  women  a  century  ago,  now  that  their  number  has  increased 
twelve  times,  is  in  that  proportion  necessary  to  them,  and  to  the 
country  by  them,  if  by  any  means  it  may  be  secured  to  them. 

P.  Hamilton's  "vast  field  of  female  labor"  was  cultivated 
under  cover  of  the  domestic  roof.  Is  the  sex  capable  of  the 
change  to  the  public  workshop  which  your  preamble  suggests  ? 

T.  The  sphere  assigned  them  by  the  dandies  of  propriety,  hap- 
pens to  be  no  sphere  at  all  in  the  profitable  system  of  public  ser- 
vice. I  would  give  them  at  least  a  hemisphere  for  their  necessary 
revolutions  in  the  industrial  system,  and  leave  to  themselves  to 
take  care  of  the  proprieties  of  their  agency.  That  is  their  busi- 
ness. It  is  ours  to  provide,  at  least  not  hinder,  their  opportu- 
nities. The  barbarous  chivalry  of  a  former  age  has,  in  the  reign 
of  honest  industry  and  equal  rights,  rotted  out  of  our  own  sex, 
and  it  behooves  us,  changing  with  the  change,  to  release  the  other 
sex  from  its  brutalities,  that  is,  its  enslaving  and  debasing  courtesy. 
By  the  way,  do  not  the  tournaments  of.  our  very  rural  gentry 
mock  the  old-time  parades,  very  much  as  the  mimicry  of  "the 
pope  of  all  fools"  travestied  the  glories  of  another  decaying  do- 
minion, and  in  the  same  way  signalize  a  reformation  ? 

I).  I  wish  I  had  not  obtruded  an  interruption  so  unnecessary 
to  you,  and  opened  on  your  side  a  radical  wrangle  with  the  con- 
servatism that  has  hard  work  to  maintain  the  social  peace. 

P.    There   is   fun   in   a  conflagration,   for  boys   and   firemen. 


264  POLITICAL    ECONOMY. 

General  Grant  said  a  good  thing  when  he  said  "  let  us  have 
peace." 

T.  I  have  the  boy's  justification :  "  he  struck  first,  besides,  I 
run  with  the  engine,  and  a  thick  smoke  as  much  as  a  bright  fire 
demands  my  attention."     Laying  aside  my  fire-proofs,  I  resume  : 

Under  the  great  change  in  the  modern  apparatus  in  production 
of  commodities  which  require  skill,  the  effective  provision  made 
for  women  appears  thus  in  the  census  of  the  year  1850  :  — 

The  wages  of  women  in  factories  was  five-ninths  of  those  of 
men,  in  the  like  employments  ;  and  they  numbered  23J  of  the 
hundred  hands  employed,  or  about  equal  to  one-fourth  of  the  male 
operatives.  In  1860  the  women  engaged  in  textile  manufactures 
were  51  per  cent.,  or  more  than  half  of  the  employees.  Their 
wages  then  amounted  to  33J  millions  of  dollars  in  the  year,  and 
their  number  was  212,383.  Twenty  years  have  transpired  since, 
and  their  employments  have  been  greatly  increased  in  number  and 
variety.  I  do  not  give  these  statistics  as  the  true  measure  of 
their  contributions  to  the  mass  of  the  country's  products,  nor  as 
the  measure  of  their  need  of  gainful  occupations.  It  may  serve 
to  indicate  their  adaptation  to  the  existing  methods  of  the  indus- 
tries required  by  the  times  ;  because  it  suggests  the  importance  of 
its  opportunities  to  them. 

The  factories  in  which  they  were  engaged  were,  in  1860,  such 
as  these :  Paper-boxes,  carpets,  clothing,  cotton  manufacturies, 
hats  and  caps,  hosiery,  millinery  and  dress-making,  straw  goods, 
umbrellas  and  parasols,  woollen  goods,  boots  and  shoes,  cigars, 
snuff  and  tobacco.  Besides  these  occupations,  above  200,000 
women  were  in  service  in  retail  merchandising. 

Mark  ;  all  the  productive  employments  mentioned  are  those  of 
commodities  in  which  foreign  manufacturers  are  in  active  competi- 
tion with  us  in  our  home  markets.  Let  down  the  bars,  and  these 
women  will  be  driven  from  this  vast  field,  which  they  have  proved 
themselves  capable  of  occupying,  and  from  all  its  prospective  en- 
largement besides. 

If  I  was  under  the  political  helplessness  of  womanhood,  I 
would  entreat  my  governing  guardian  to  save  to  my  sex  the  labor 
that  is  our  only  independent  property  in  the  social  partnership ; 
and  as  I  am  a  man,  I  own  the  righteousness  of  the  claim.     The 


INTERNATIONAL   TRADE.  265 

idleness  of  women  is  their  imbecility  and  their  perdition.  It  is 
bondage  of  soul  and  body — a  curse  as  heavy  as  intemperance  upon 
their  brother  men,  and  quite  as  mean  and  worthless.  In  large 
part  it  is  enforced  upon  them.  In  the  proportion  that  their  social 
status  and  relations  are  ameliorated,  their  personal  independence 
and  its  proper  dignities  are  secured. 

D.  Would  you  grant  them  the  right  of  suffrage  ? 

T.  I  would  grant  them  nothing,  but  would  put  them  in  the  way 
of  earning  and  achieving  anything  and  everything  that  they  can 
by  their  own  proper  force  acquire.  Simple  emancipation  is  not  a 
boon,  nor  in  itself  a  beneficence.  Enfranchisement,  without  the 
conditions  which  make  it  available,  is  only  turning  its  subjects 
loose  "  to  prey  on  fortune,"  or  become  its  prey.  "  Unbind  the 
heavy  burdens ;  let  the  oppressed  go  free  "  of  conventional  re- 
strictions, to  find  their  place  and  to  qualify  themselves  for  the 
healthy  exercise  of  whatever  there  is  in  them. 

P.  The  rule  of  reserving  and  securing  to  all  the  opportunity  of 
using  their  liberty  of  choice  and  the  fitness  of  means  to  best  ends, 
extends  to  the  claims  of  all  varieties  and  degrees  of  capability, 
and  must  necessarily  rule  all  commerce,  foreign  and  domestic.  Is 
not  that  cosmopolitanism  in  principle  ? 

T.  In  a  cosmopolitan  government  it  would  be.  But  the  duties 
and  the  care  of  a  national  government  are  bounded  by  the  extent 
and  limits  of  its  domain — the  duty  by  the  power  entrusted — just 
as,  in  the  family,  the  duty  is  commensurate  with  the  authority 
committed  to  the  executive.  A  missionary  of  a  gospel  of  glad 
tidings  to  all  men,  who  neglects  his  own  household,  thins  his  phi- 
lanthropy by  its  expansion ;  and  the  nation  that  devolves  its 
proper  care  of  the  interests  committed  to  its  governance  leaves 
the  stranger  to  control  them  to  his  own  advantage.  The  principle 
of  Laissez  /aire,  in  the  exchanges  of  industry,  when  it  says, 
"  Do  as  you  please,"  subjects  its  disciples  to  do  as  anybody  else 
pleases.  Ask  a  loafer  to  pledge  himself  to  sobriety  ;  he  answers  : 
"  I  can  take  care  of  myself;  I  know  what  is  best  for  me  ;  and  I 
won't  allow  anybody  else  to  govern  or  protect  me."  After  his 
next  spree,  when  he  is  sick  of  it,  his  apology  is :  "I  happened 
to  meet  Tom,  and  Dick,  and  Harry,  and  you  know  I  couldn't  re- 
fuse them.  So  I  took  a  little  too  much." 
18 


266  POLITICAL  ECONOMY. 

The  nation  that  will  not  protect  itself,  will  find  Tom,  Dick  and 
Harry  take  its  government  into  their  own  hands  ;  but  then,  to  be 
sure,  it  has  asserted  its  good  fellowship  with  all  the  world.  The 
consequences  are  accidental,  and  accidents  will  happen  in  the  best 
of  families,  especially  in  those  that  are  misgoverned  or  not  gov- 
erned at  all,  as  to  the  matters  in  which  they  are  most  exposed  to 
mischief. 

P.  I  think  that  you  have  not  yet  disposed  of  the  impeachment 
that  is  implied  in  universal  philanthropy  or  cosmopolitanism 
against  nationalism  in  trade,  or  to  the  objections  urged  by  free 
trade  as  it  operates  upon  the  welfare  of  the  nations  which  adopt 
it,  or  as  its  adoption  is  urged  by  its  partisans  upon  all  countries 
alike. 

T.  A  universal  principle  rules  international  trade,  for  nothing 
in  the  course  of  nature  is  lawless  ;  but  no  particular  policy  is 
adapted  to  the  diverse  conditions  of  its  subjects. 

Rational  and  logical  protection  is  patriotic,  which  is  more  com- 
pact and  effective  than  a  thinly  expanded  and  impracticable  com- 
munism, which,  for  the  sake  of  being  everywhere,  resides  nowhere, 
and  in  its  effort  to  do  everything,  does  nothing.     A  system  of 
national  protection,  well  devised  and  adapted,  proposes  the  benefit 
of  the  whole  world  by  taking  care  of  its  parts  ;  and  is  not  other- 
wise cosmopolitan  than  as  the  prosperity  of  every  particular  peo- 
ple is  a  necessary  constituent  of  the  general  welfare,  and  as  the 
good  of  each  is  reflected  upon  every  other  nationality,  in  the  ratio 
of  their  several  aptitudes.     This  is  just  as  true  a  directory  of  the 
relations  and  influences  of  the  members  of  any  community.     Both 
among  individual  men  and  nations,  a  wise  philanthropy  graduates 
its  beneficence  in  direct  rays  on  the  nearest  interests,  and  diffuses 
its  force  as  the  sun  gives  his  heat  and  light  collaterally  to  the 
latitudes  which  lie  more  remote  from  the  ecliptic.     A  cosmopoli- 
tan antedates  the  millennium,  and  theoretically  lugs  the  equities 
of  a  perfect  order  into  an  ungoverned  disorder  of  affairs.     To 
effect   his   levelness  of  dealing    with    the    inequalities  which  he 
must  encounter,  he  expects  the  mountains  to  sink  and  the  valleys 
to  rise,  so  that  a  wrinkle  of  gradation  or  difference  shall  not  ob- 
struct the  smooth  movement  of  his  policy.     In  the  existing  condi- 
tion of  things,  he  must  repress  the  energy  of  the  highest  and  best 


INTERNATIONAL   TRADE.  267 

to  the  weakness  and  incapacity  of  the  lowest ;  as  drunken  Indians 
are  said  to  handicap  their  fleetest  ponies,  that  the  slow-goers  may 
be  able  to  make  an  even  race. 

Unfortunately  for  his  aim,  his  guiding  principle,  laissez  faire, 
allows  any  and  every  disproportion  of  means  and  power  all  their 
existing  supremacy  in  the  contest,  and  thus  his  basis  principle  of 
equal  right  is  at  war  with  his  professed  purpose. 

The  protective  system,  on  the  contrary,  addresses  itself  to  the 
conditions  which  it  is  concerned  with,  and  to  the  work  within  the 
scope  of  its  powers. 

A  genius  who  had  just  enough  practical  sense  to  go  indoors 
when  it  rained,  applied  for  a  patent  intended  to  protect  cornfields 
from  the  depredations  of  squirrels.  He  had  observed  that  the 
outside  rows  were  most  exposed  to  spoliation.  His  remedy  was  to 
have  no  outside  rows — to  put  them  all  inside.  That  fine  fellow 
had  a  perfect  cosmopolitan  cornfield  in  his  scheme.  By  keeping 
all  the  rows  equally  near  the  centre  he  could  give  them  all  an 
even  chance  and  an  equal  care. 

D.  Unwilling  to  struggle  for  the  last  word  in  a  dispute  upon 
abstractions,  I  should  like  to  recall  you  to  a  difficulty  on  your  side 
of  the  question.  You  are  concerned  to  show  how  special  favor 
to  one  class  of  people  distributes  its  benefits  ratably  upon  other 
than  their  immediate  beneficiaries.  Your  protective  policy  mainly 
intends  the  encouragement  of  manufactures.  This  is  prima  facie 
partiality,  and  demands  explanation  and  justification. 

T.  I  will  give  you  General  Jackson's  answer  to  your  question. 
He  was  not  a  visionary,  a  doctrinaire,  or  a  root-and-branch  world- 
mender  ;  moreover,  he  was  one  of  your  party  in  its  better  days. 
In  his  first  message  to  Congress,  he  avows  himself  a  protectionist 
and  quotes  Washington,  Jefferson,  Madison,  and  Monroe  as  his 
exemplars  and  guarantees.  You  will  respect  the  authorities  in  this 
list.  In  the  General's  letter,  addressed  to  Dr.  Colman,  in  1824, 
pending  the  discussion  of  the  customs  tariff  of  that  year,  he  said 
that  if  six  hundred  thousand  persons  could  be  withdrawn  from 
agriculture,  its  products  would  find  a  good-paying  home  market, 
by  converting  its  over-crowded  producers  into  consumers,  with  the 
advantage  of  improving  the  gains  of  the  better  adjusted  number 
of  cultivators  of  the  soil,  and  the  profitable  employment  of  that 


268  POLITICAL  ECONOMY. 

multitude  which  are  kept  idle  by  the  competition  of  foreign  im- 
ports, and  thus  build  up  our  own  skilled  industries  ;  securing,  at 
once,  supplies  in  war,  and  prosperity  in  peace. 

The  protection  needed  by  our  manufactures  was  in  his  judg- 
ment the  only  practicable  protection  to  the  farming  interests.  In 
circumstances  which  always  exist,  the  fostering  of  one  class  of 
industrial  pursuits  must  operate  to  the  advantage  of  every  other. 
At  the  date  of  this  letter,  according  to  the  author,  "American 
farmers  had  no  market  either  at  home  or  abroad,"  and  for  this 
reason,  a  sound  rectification  of  supply  and  demand  could  only,  be 
effected  by  a  due  diversification  of  the  home  industries.  It  is 
true  that  a  famine  in  Europe  makes  an  extraordinary  demand  for 
our  provisions,  while  the  occasion  holds.  But  it  is  a  foreign 
market  subject  to  uncontrollable  and  incalculable  contingencies. 
Sometimes  in  the  past,  seventy-five  per  cent,  of  imported  wheat 
into  Great  Britain  is  American;  sometimes,  within  a  year  of  this 
demand,  our  share  of  the  supply  has  fallen  to  twelve  per  cent. 
Can  a  steady  business,  depending  for  its  preparation  a  year  in 
anticipation  of  such  uncertainty,  bear  the  fluctuations  of  demands 
and  of  prices,  to  which  it  is  exposed  ?  Encouraged  by  the  pros- 
pects of  this  season,  it  gorges  the  market  of  the  next,  and  has  all 
the  debts,  born  of  flush  times,  to  meet  when  the  hard  times  come. 
D.  This  trade  has  turned  the  balance  of  international  trade, 
for  two  or  three  years,  steadily  in  our  favor. 

T.  That  is  the  proper  fruit  of  free  trade  which  our  British 
cousins  are  now  reaping.  To  maintain  their  superiority  in  manu- 
factures, they  have  broken  down  their  agriculture  and  oppressed 
their  labor,  and  now  they  are  suffering  the  effects  of  a  dreadfully 
broken  balance  of  productive  power.  They  have  not  maintained 
a  due  diversification  and  healthy  inter-dependence  of  their  wealth- 
creating  resources.  An  immense  emigration  of  their  people  to 
America  and  Australia  has  for  some  time  partially  abated  the  mis- 
chiefs of  their  system  ;  but  now,  they  are  suffering  the  beginning 
of  the  end,  which  must  follow  their  violation  of  the  laws  of  nature 
and  of  justice.  In  the  hereafter  they  must  of  necessity  take 
our  surplus  of  food  at  such  prices  as  they  shall  be  able-  to  pay, 
and  our  farmers  will  have  to  choose  between  burning  their  corn 
for  fuel  and  exporting  it  to  their  only  European  customer ;  for  all 


INTERNATIONAL   TRADE.  269 

the  other  nations  of  the  Eastern  Continent  are  not  only  self-sup- 
plying, but  are  our  rivals  in  the  British  market  for  the  sale  of 
their  surplus.  The  necessary  result  is  coming.  General  Grant, 
in  1869,  concurs  with  General  Jackson,  after  a  lapse  of  forty-five 
years  of  further  experience.  He  says :  "The  extension  of  rail- 
roads in  Europe  and  the  East  is  bringing  into  competition  with 
our  agricultural  products,  like  products  of  other  countries."  And 
justly  infers  that  tlie  home  market  is  the  only  reliable  and  perma- 
nent one  of  our  farmers. 

P.  I  have  seen  it  stated  that  three-fourths  of  the  people  of  the 
more  advanced  nations,  industrious  and  idle,  are  the  customers  of 
the  manufacturing  class,  and  that  one-fourth  may  be  advanta- 
geously employed  in  what  is  called  the  converting  industries,  to 
distinguish  them  from  the  producers  of  raw  materials.  Is  that  a 
fitting  division  of  the  industrial  functions  of  a  community  ? 

T.  I  cannot  answer.  It  is  quite  impossible  to  form  an  estimate 
from  the  data  at  command.  The  average  value  of  the  raw  material 
employed  in  manufacturing  establishments,  in  the  year  1860,  is 
given  at  53J  per  cent,  of  the  value  of  the  products  ;  but  the  cen- 
sus reports  do  not  nearly  embrace  all  the  arts  of  conversion,  and 
their  supplies  of  materials.  I  guess  that  it  would  not  be  far 
wrong  to  estimate  the  respective  values  of  their  products  at  an 
equality. 

In  Great  Britain  (Ireland  excluded)  the  proportion  is  supposed 
to  be  three  of  the  class  of  manufacturers,  exchangers,  transport- 
ers, and  professional  people,  to  one  of  the  agriculturists  and  other 
producers  of  raw  material.  The  relative  numbers  are  probably 
between  those  of  Great  Britain  and  the  United  States.  This 
estimate  is  supported  by  the  fact  that  England,  Scotland,  and 
Wales  cannot  find  an  answering  demand  for  their  manufactures  at 
home,  but  are  dependent  upon  foreign  trade  for  the  larger  part  of 
their  artificial  products,  and,  of  necessity,  are  concerned  to  keep 
.  the  communities  with  which  they  must  trade,  in  the  ratio  of  three 
to  one  as  consumers,  to  balance  their  three  to  one  of  producers. 
Would  not  a  well-balanced  equality  or  relation  of  the  respective 
forces  of  these  two  great  classes  make  a  better  division  of  their 
mutual  interests  than  to  have  one  of  the  scales  hung  in  suspense 
by  the  other  in  another  hemisphere  ? 


270  POLITICAL  ECONOMY. 

D.  You  would  find  protection  everywhere — in  all  trade,  and  in 
the  money  medium,  as  well. 

P.  What  a  cross-reading  this  idea  forces  upon  the  British  hrag 

"  Her  march  is  o'er  the  mountain  wave, 
Her  home  is  on  the  deep." 

If  the  mutualities  of  her  home  industries  were  better  equipoised, 
she  would  not  need  to  disturb  their  balances  everywhere  else. 
This  view  of  the  situation  throws  an  illustrative  light  upon  all  the 
past  of  her  commercial  history,  and  upon  the  future  of  her  for- 
tunes. She  is  on  a  see-saw  with  the  nations,  the  outside  barbari- 
ans, and  she  is  up  only  when  they  are  down.  It  was  best  to  put 
her  portraiture  into  poetry.  Why  not  call  her  usurpation  of 
everybody's  labor,  a  polytechnic  metropolis  of  trade  ?  Adam 
Smith,  whom  she  still  worships,  rudely  called  her  "  a  nation  of 
shop-keepers,"  striving  to  make  herself  "  the  workshop  of  the 
world."  Daniel  Webster  furnishes  her  with  another  euphuism 
— "  Her  morning  drum-beat  follows  the  sun  round  the  globe." 
That  is  better  than  to  describe  her  mercantile  marine  as  a  host  of 
drummers  for  an  island  huckster. 

D.  Softly,  my  boy.  Don't  forget  that  we  have  a  common 
origin,  a  common  language,  and  a  common  destiny. 

P.  The  partnership  is  well  enough,  so  far  as  it  is  even-handed, 
but  I  don't  like  a  circular  hunt  in  which  I  must  take  the  role  of 
the  hare,  and  my  venerable  step-mother  personates  the  hound. 

T.  A  due  balance  in  the  industries  of  a  people,  as  respects 
others,  and  the  harmony  upon  which  the  welfare  of  every  indi- 
vidual depends,  is  a  clear  justification  of  the  governmental  inter- 
vention by  which  such  ends  are  to  be  attained.  The  ten  thousand 
differences  of  ability,  taste,  and  fitness  for  the  corresponding  ten 
thousand  varieties  of  supplies  demanded,  must  be  provided  for, 
that  every  man's  place  maybe  kept  open  for  him.  I  need  not 
amplify  this  proposition,  but  I  must  ask  you  to  make  an  effort  to 
grasp  the  vast  variety  of  occupations  required  to  evoke  the  whole 
wealth  of  talent,  labor,  and  enterprise  latent  in  such  a  community 
as  ours.  Natural  laws  do  not  bring  the  water  of  the  rivers  to 
every  man's  door  in  permanent  and  sufficient  abundance.  It  is 
the  lawful  business  and  the  imperative  duty  of  the  communal 


INTERNATIONAL   TRADE.  271 

executive  to  gather  the  needed  supply  into  convenient  reservoirs  ; 
to  lay  the  mains  and  open  the  pipes  that  shall  keep  the  hydrants 
copiously  supplied,  and  in  a  force  that  shall  accommodate  every 
household  from  attic  to  basement  ;  to  see  that  the  fountain  is  kept 
flowing  full,  and  then  trust  the  distribution  according  to  every 
need.  The  common  law  of  gravitation  will  not  hinder  the  waters, 
heaped  up  in  special  places,  from  finding  their  level.  There  may 
be  some  wantonness  of  waste  in  the  overflow,  but  there  can  be  no 
necessary  mischievousness  in  such  accidental  misappropriation,  for 
"  they  that  gather  much  in  the  end  will  have  nothing  over  ;  and 
he  that  gathers  little  has  no  lack"  (Exodus  xvi.  15),  if  the 
fountain  be  a  full  one. 

D.  If  the  provision  came  like  manna  from  heaven,  it  would  be 
surer  of  an  equitable  appropriation  than  when  it  is  supplied  from 
the  purse  of  the  nation,  or  by  exactions  from  the  people. 

T.  We  do  not  make  ourselves  responsible  for  a  miraculous  allot- 
ment of  the  benefits.  We  only  supply  the  means.  The  distribu- 
tion depends  upon  the  parties  interested.  Protection  makes  its 
benefits  equable,  probable,  and  even  certain  to  all  who  put  them- 
selves within  the  purview  of  its  provisions.  What  more  can  legis- 
lation, or  even  Providence,  do  for  men  as  we  find  them? 

D.  In  dogma  and  in  deduction,  in  dialectics  and  dispute,  you 
seem  so  well  assured  that  I  must  put  your  pet  policy  to  the  ex- 
perimentum  crusts  of  its  practical  results.  What  does  its  his- 
tory say  for  it  in  experience  ;  and  what,  especially,  do  the  va- 
rious forms  and  long  trial  among  ourselves  report  of  its  merits  ? 

T.  We  are  most  familiar  with  the  story  of  its  operation,  and 
most  likely  to  be  thorough  in  our  examination  of  the  question  in 
English  and  American  experience. 

D.  You  have  given  us  your  anti-British  bias  in  tidbits  of  allu- 
sion, interspersed,  as  opportunity  served,  throughout  these  con- 
versations, with  criticisms,  which  are  subject  to  some  discount  for 
prejudice  in  opposition  to  it,  as  well  as  for  enthusiasm  for  your 
own  doctrines. 

T.  I  am  not  indifferent  to  the  issues  of  inquiries  which  involve 
the  interests  of  society.  I  am  not  of  the  free-and-easy  sort  of 
wranglers  who  hold  with  the  old  Greek  dialecticians,  that  there  is 
no  argument  so  good  but  an  equally  good  one  can  be  brought 


272  POLITICAL  ECONOMY. 

against  it.  Nor  have  I  that  loaferish  indifference  to  facts  and 
doctrines  that  naturally  grows  out  of  laissez  faire,  laissez  jjasser. 
Believing  that  truths  are  dynamics  in  the  conduct  of  economic  and 
social  life,  I  wait  for  the  verdict  of  guilty  or  not  guilty,  when  a 
policy  of  government  is  on  its  trial,  with  a  sentence  to  follow.  It 
is  a  do-nothing  policy  that  yawns  over  the  tediousness  of  evidence, 
and  listlessly  mumbles,  "  Oh!  what  is  truth  ?"  Not  as  a  question, 
but  as  a  dodge  and  an  escape  from  investigation  and  earnest  de- 
cision. I  am  happy  to  say  that  I  have  prepossessions,  and  want 
to  believe  something,  and  obey  it.  Help  me  to  hold  my  hope 
inservient  to  faith,  under  the  rule  of  charity. 

J).  As  you  admit  me  as  a  helper,  I  will  not  be  an  obstructive, 
but  will  try,  as  I  may  be  able,  to  serve  only  as  a  corrective. 

T.  Bear  with  me  while  I  run  over  the  stepping-stones  in  the 
current  course  of  British  protection : — 

England  began  her  system  of  restriction  and  prohibition  of 
foreign  trade  in  the  year  1338,  under  Edward  III.  (the  British 
Justinian),  and  she  persisted  in  it  systematically  and  resolutely 
for  more  than  five  centuries — till  1846.  The  statutes  of  Parlia- 
ment and  the  ordinances  of  the  Privy  Councils,  throughout  this 
long  infancy  of  her  manufactures,  would  fill  a  big  octavo  volume. 

In  1782  the  duty  levied  upon  foreign  bar-iron  was  .£2.16.2 
($13.46)  per  ton.  In  1819  it  was  raised  to  £6.10.0  ($31.60). 
In  1826  it  was  reduced  to  £1.10.0  ($7.30).  In  these  44  years 
her  iron,  under  protection,  had  attained  the  mastery  over  all  com- 
petitors, and  the  duty  of  $7.30  was  retained  only  for  more  abun- 
dant caution.  The  prices  of  iron  the  year  before  this  reduction 
(in  1825)  were,  in  France,  £26.10.0  ;  in  Belgium  and  Germany, 
£16.14.0;  in  Sweden,  £13.13.0;  in  England,  at  Cardiff, 
£10.00.0.  Verily,  it  was  quite  safe  to  take  off  the  splints  and 
bandages,  and  discard  the  crutches  when  the  limb  through  their 
support  had  gathered  such  strength  for  the  race  against  all  con- 
testants for  the  prize. 

Passing  over  the  period  of  her  savage  penalties  upon  the  im- 
portation of  woollen  fabrics,  by  forfeitures,  imprisonment  and 
maiming  (for  which  see  Blackstone,  4th  volume,  title  Owling),  and 
the  sumptuary  laws,  the  crushing  restraints  upon  the  industries  of 
her  colonies,  and  the  navigation  laws  which  closed  like  a  steel-trap 


INTERNATIONAL   TRADE.  273 

upon  all  maritime  competition,  with  "  more  of  horrible  and  awful, 
which  even  to  name  would  be  unlawful,"  and  all  alike  intended 
for  the  defence  of  her  own  domestic  manufactures,  look  at  her 
customs  duties  and  prohibitions  in  full  force  so  lately  as  after  our 
Declaration  of  Independence.  In  1787,  silks  prohibited,  woollens 
prohibited  ;  cotton  fabrics  charged  from  44  to  60  per  cent. ;  glass 
60  per  cent.  In  1819,  silks  still  prohibited  ;  glass  80  per  cent. 
Up  to  the  very  last  days  of  her  established  supremacy,  she 
charged  on  silks  25  to  40  per  cent. ;  on  woollens  15  to  20,  and  on 
cottons  10  to  20  per  cent.  Until  about  1830  she  was  not  safe 
against  the  rivalry  of  the  continent  in  the  production  of  these 
goods. 

In  general  and  in  particulars  this  is  true  of  her  policy :  she 
never  repealed  a  protective  duty  by  act  of  Parliament  until  long 
after  it  had  been  effectually  repealed  by  her  acquired  success  in 
cheapening  her  products  to  the  extent  that  she  could  undersell  the 
like  goods  in  the  world's  market,  and  so  bar  them  out  of  her  own; 
and  she  has  not  to  this  day  given  up  the  defence  of  her  home 
market  against  the  products  of  other  nations — of  this  more  here- 
after. 

D.  Protection  has  an  American  history  of  something  approach- 
ing a  century,  which  one  would  think  ought  to  have  matured  the 
domestic  industries  quite  as  much  as  five  centuries  of  the  earlier 
struggle  in  which  England  was  engaged  with  India,  in  the  matter 
of  cottons,  with  Persia  in  the  finer  woollens,  and  with  France, 
which  for  the  later  thirty  years  of  the  strife,  maintained,  accord- 
ing to  McCulloch,  a  steady  defence,  amounting  in  effect  to  absolute 
prohibition  of  all  competing  imports. 

T.  It  is  now  but  90  years  (1790  to  1880)  since  the  Federal 
Union  entered  upon  its  system  of  protection,  and  that  history  is 
a  strange,  eventful,  and  instructive  one.  I  must  be  allowed  to 
trace  it  briefly,  touching  only  its  epochal  points. 

From  the  commencement  of  the  French  Revolution,  say  in 
1793,  to  the  year  1815 — 22  years — the  wars  of  western  Europe 
gave  us  some  shelter,  by  suspending  hostilities  in  our  industrial 
conflict  with  the  trans- Atlantic  world  ;  but  then  we  were  yet  in  the 
woods ;  we  had  neither  the  capital,  the  labor,  nor  a  sufficient  pop- 
ulation to  avail  ourselves,  to  any  great  extent,  of  the  chance  af- 


274  POLITICAL  ECONOMY. 

forded  us.  The  return  of  peace  in  Europe,  after  the  fall  of 
Bonaparte,  and  the  liberation  of  the  working  people  of  England, 
France,  and  Germany,  from  their  occupation  in  arms,  to  industrial 
employments,  changed  the  situation.  Our  tariffs,  from  that  of 
1816,  till  that  of  1824,  or  indeed  till  that  of  1828,  had  served 
but  inadequately  for  revenue,  and  not  at  all  for  protection.  Dur- 
ing these  12  years,  the  manufactures  of  the  United  States  were 
undergoing  the  process  of  "  strangling  in  the  cradle,"  avowed  by 
Lord  Brougham  and  Joseph  Hume  ;  and,  as  the  spirit  of  British 
domination  was  expressed,  we  "  should  not  be  allowed  to  make  so 
much  as  a  hobnail  for  ourselves."  We  had  lately  been  the  polit- 
ical dependencies  of  Great  Britain,  and  the  purpose  of  holding  us 
in  the  condition  of  industrial  colonization  was  openly  declared  and 
by  every  possible  measure  rigidly  practised. 

The  deduction  of  these  two  periods  from  the  reign  of  the  pro- 
tective legislation  leaves  but  56  years  to  be  accounted  for.  The 
fully  protective  tariff  of  1828  had  a  fair  run  of  four  years  only, 
and  a  compromised  extension  of  about  two  years  more.  In  that 
time  the  whole  national  debt  of  two  wars  of  arms  with  the  mother 
country  had  been  px'ovided  for,  and  actually  extinguished;  the 
Treasury  was  full  to  over-flowing,  and  universal  prosperity  pre- 
vailed among  the  people.  Jeshurun  waxed  fat,  and  kicked.  The 
party  that  regarded  protective  duties  as  an  oppressive  tax  upon 
consumers,  maugre  the  demonstration  of  its  fallacy,  thought  it 
was  the  proper  time  to  kill  the  goose  that  laid  the  golden  eggs. 
Chai'ge  protection  with  these  six  years  of  its  opportunities,  that  is 
from  1828  to  1834.  Then,  wholly  deprived  of  its  efficiency,  we 
had  a  succession  of  panics  followed  by  revulsions  which  lasted  till 
1842,  carrying  their  mischiefs  into  the  year  or  two  after  the  re- 
stored policy  of  defence  was  provided  for  redress  of  the  evils  of 
an  8  or  9  years  rule  of  free  trade.  The  tariff  of  1842  was  com- 
pelled by  both  national,  and  general  private,  bankruptcy.  The 
Secretary  of  the  Treasury  reported  to  Congress  in  the  year  1841 
that  a  public  loan  could  not  be  obtained  either  at  home  or  abroad, 
and  this,  but  five  years  after  the  exchequer  had  to  be  relieved  of 
its  surplus  by  the  distribution  of  twenty-eight  millions  among  the 
several  States  of  the  Union.  The  sheriff's  offices  of  the  country 
now  became  the  clearing  houses  of  private  debts.    Do  you  remem- 


INTERNATIONAL   TRADE.  275 

ber  that  General  Jackson,  whose  presidency  lasted  from  1829  to 
1837,  "left  his  country  happy  at  home  and  respected  abroad"  ? 
that  is,  the  tariff  of  1828  did  it;  and  do  you  remember  that  Van 
Buren,  handicapped  by  Clay's  compromise  tariff,  was  groaned 
out  of  office,  in  1840,  by  the  cry  of  hard  times,  in  the  popular 
belief  of  Washington's  opinion,  that  distressing  scarcity  of  money 
in  a  country  in  time  of  peace,  exempt  from  a  failure  of  crops  and 
from  pestilences,  is  the  fault  of  the  political  administration  ?  The 
election  of  that  year  brought  in  a  change  of  policy,  as  with  a 
whirlwind,  of  which  the  seed  was  sown  by  the  Clay  compromise 
of  1833.  and  had  developed  its  ruinous  free-trade  effects  fully  in 
the  great  business  revulsion  of  1837. 

By  the  way,  it  was  not  the  non-committal  Van  Buren,  but  the 
compromising  Clay,  the  "  father  of  the  American  system,"  that 
this  time  did  the  strangling  of  American  manufactures  in  the 
cradle.  Well,  the  tariff  of  1842,  for  the  public  and  private  benefit 
that  it  did,  must  needs  be  modified  in  1846,  so  that  it  afforded 
only  incidental  protection,  which  prepared  the  way  for  the  amend- 
ment of  1857,  intended  only  for  revenue,  and  which  eventually 
failed  even  of  that  object,  and  gave  us  another  turn  of  the  wheel, 
that  went  on  with  its  grinding  until,  in  1860, -the  Southern  rebel- 
lion once  more  forced  the  restoration  of  the  remedial  policy  of 
duties  protective  in  their  rates,  which  had  twice  before  retrieved 
the  fortunes  of  the  people,  and  amply  supplied  the  national 
finances.  To  be  liberal,  I  am  willing  to  add  the  years  from  1842 
to  1856  to  the  debit  side  of  the  account  of  protection  ;  from  1828 
to  1836,  eight  years ;  and  from  1842  to  1856,  fourteen  years 
more  ;  making  together  twenty-two  years  of  the  forty-two  unjustly 
chargeable  up  to  1860. 

In  this  view  of  the  case,  what  is  the  force  of  the  sarcasm  in- 
tended in  the  phrase,  "  Our  infant  manufactures  ?"  An  infancy 
exempted  from  repression  during  the  period  that  it  could  only 
creep,  farmed  out  afterwards  for  half  a  dozen  years  to  nurses  that 
had  an  interest  in  starving  it ;  and,  after  another  term  of  twelve 
or  fourteen  years,  while  the  stripling  was  learning  to  toddle  on 
its  unpractised  little  feet,  subjected  again  to  the  repressing  sys- 
tem four  years  more.  "  Faith,  it  must  have  been  a  strapping 
lad, — a  tall  fellow  of  its  hands,"  that  could,  in  the  last  twenty 


276  POLITICAL   ECONOMY. 

years  of  its  fractured  life,  grow  into  the  robust  strength  that  it 
has  at  last  attained.  If  this  strong  fellow's  age  were  asked  he 
might  answer,  "  About  twenty-eight,  for  I  have  been  twelve  years 
in  hospital  and  poor-house,  and  as  long  a  convalescent,  which,  I 
hope,  I  shall  not  be  charged  with,  although  I  was  born  fifty-two 
years  ago." 

Protection  in  the  United  States  has  not  been  treated  as  a 
guardian  of  the  person  and  estate  of  the  people.  It  has  only 
been  called  on  to  extricate  the  country  from  the  disasters  inflicted 
by  free  trade  ;  and,  like  a  sick  nurse,  has  been  as  often  discharged 
from  service  at  the  earliest  hour  of  the  patient's  convalescence. 

D.  Why,  in  your  summary,  stop  the  story  at  the  beginning  of 
the  Southern  rebellion  ?  Protection  has  had  a  fair  field  and  a  clear 
run  in  the  twenty  years  that  have  since  elapsed. 

T.  And  has  worked  wonders  in  the  fulfilment  of  all  its  prom- 
ises ;  and,  as  usual,  is  now  again  threatened  with  destruction,  as 
a  discharge  from  duty  fully  and  faithfully  performed.  Like  an 
army  that  has  conquered  a  peace,  it  is  to  be  disbanded  until  the 
next  insurrection  of  free  trade  shall  compel  its  re-enlistment.  The 
pernicious  notion,  that  protective  duties  are  taxes,  because  they 
always  perform  the. like  service  to  the  revenue  of  the  nation,  sets 
the  sciolists  of  statesmanship  at  the  work  of  repealing  them  when 
they  have  answered  that  purpose,  as  if  they  intended  no  other ! 

D.  You  have,  I  believe,  some  respect  for  public  opinion.  May 
not  the  instability  of  the  system  be  chargeable  to  the  dissent 
which,  for  some  inherent  fault,  it  does  not  conquer?  "Experi- 
ence, which  is  constantly  contradicting  theory,  is  the  only  test  of 
truth,"  says  Doctor  Johnson. 

T.  A  hostile  interest,  with  a  guilty  knowledge  of  the  heresy, 
and  a  guilty  purpose  in  it,  has  subsidized  its  propagandists,  and 
acted  upon  the  careless  and  the  ignorant,  who  have  had  the  power 
to  effect  the  frequent  suspensions  of  the  healthful  and  rightful  rule. 

Do  you  remember  that  always  before  our  great  Southern  rebel- 
lion, a  balance  in  the  governing  power  of  the  Union  lay  in  the 
region  which  held  its  labor  as  a  chattel,  and  never  intended  that 
labor  for  the  benefit  of  the  laborer  ;  that,  under  its  system  of  the 
industries,  its  agriculture  was  exhaustion  of  the  soil ;  that,  not 
only  its  fitful  prosperity,  but  its  very  existence,  depended  upon 


INTERNATIONAL   TRADE.  277 

annexation  of  fresh  territory  ;  that  its  economic  policy  aimed,  not 
at  fostering  the  productive  power  of  the  nation,  but  at  the  cheap- 
ening of  all  things  which  they  could  not  make,  and  the  cheapen- 
ing of  the  men  that  must  make  them  ? 

These,  with  a  host  of  idlers  and  factors  of  the  foreign  and  in- 
imical interest,  were  ever  actively  at  work,  lying  in  wait,  and 
ready  to  spring  upon  the  true  national  policy  at  its  boundary 
point  of  prosperous  fortunes. 

Against  such  a  many-headed  throng  the  system,  which  is  enti- 
tled to  be  called  that  of  the  Productive  power  of  the  people,  as 
distinguished  from  that  of  Mercantile  exchange,  has  ever  had  to 
contend.  It  had  to  wrestle  for  life  with  a  light-headed,  juggling, 
bouncing  Jack,  that  recovers  itself  by  the  rebound  of  the  force 
which  overturns  it. 

D.  Then  free  trade  has  its  strength  in  its  breeches,  or  if  you 
like,  in  its  breeches-pockets. 

T.  No  ;  it  has  its  weight  there,  but  its  jumpings  are  entirely 
due  to  the  relative  lightness  of  its  brains  and  heart. 

D.  Persiflage  apart.  You  surprised  me  some  time  ago  by  de- 
claring that  England  still  continues  to  protect,  by  customs  duties 
upon  foreign  imports,  such  of  her  domestic  products  as  are  endan- 
gered by  competition  in  her  home  market.  Her  official  author- 
ities are  constantly  proclaiming  that  she  has  persistently  and 
successfully  practised  upon  the  principle  of  free  trade,  pure  and 
simple,  for  the  last  thirty  years.  In  evidence,  the  "  statistical 
abstract"  of  1875  has  this  marginal  note  appended  to  the  tables 
of  their  tariff  rates  then  in  operation :  "  The  total  number  of 
articles,  and  sub-divisions  of  articles  in  the  English  tariff  of  import 
duties  was  53  in  May,  1875,  as  compared  with  397  in  1859.  and 
1046  in  1810."  Does  not  this  sweeping  reduction  of  imposts  sus- 
tain the  boast  they  make  ? 

T.  Let  us  look  at  the  duty -paying  articles  retained  in  the 
schedule  covering  the  53  articles  upon  which  charges  are  still  ex- 
acted, that  we  may  see  what  of  protection  lurks  in  them  : 

First,  I  quote  the  captions  of  the  classes  charged  with  import 
duties  :  "  Ordinary  import  duties."  In  this  list  are  enumerated 
coffee,  cocoa,  tea,  tobacco,  unmanufactured ;  and  a  few  other 
articles  snatched  into  the  schedule  to  which  they  do  not  belong ; 


278  POLITICAL  ECONOMY. 

such  as  cigars  and  snuff.  On  all  these,  except  the  last  mentioned, 
she  collects  what  may  be  called  internal  taxes  or  excises  at  the 
custom  houses.  The  charges  upon  the  articles  proper  to  this 
schedule,  are  not  protective,  because  they  do  not  compete  with 
any  native  product.  But,  upon  wines,  in  like  manner  improperly 
put  under  the  class  of  "  ordinary  import  duties,"  because  their 
duties  are  in  fact  and  effect,  as  upon  manufactures  of  tobacco,  pro- 
tective of  the  home  industry.  Upon  the  domestic  stimulating  liquors 
which  they  confront  in  the  home  market,  the  tariff  levies  one  shil- 
ling, two  shillings  and  six  pence,  and  upwards  per  gallon,  accord- 
ing to  the  quantity  of  proof  spirits  which  they  contain  ;  that  is 
12,  30,  and  36  cents  per  gallon,  according  to  strength,  upon  wines 
costing  in  France  and  Germany,  an  average  of  $1.97,  which  is 
about  20  per  cent,  of  defence  of  their  invoice  value  against  them. 

Upon  tobacco  manufactures  the  charge  is  the  difference  be- 
tween 44  cents  on  the  pound  of  the  unmanufactured,  and  60  cents 
upon  cigars,  and  54  cents  upon  snuff.  The  surcharge  being 
plainly  a  protection  of  the  labor  employed  in  the  manufacture. 

The  second  schedule  is  headed  "  Import  duties  to  countervail 
excise  duty  upon  British  malt."  Under  this  head  beer  and  ale 
are  charged,  according  to  strength,  from  8  shillings  (§1.92)  up  to 
16  shillings  ($8.84.)  per  barrel  ;  and  upon  malt,  $2.88  upon  the 
quarter,  or  two  bushels  ;  on  vinegar,  6  cents  per  gallon. 

The  third  schedule  of  tins  free  trade  tariff  list,  headed  "Import 
duties  to  countervail  excise  duty  upon  British  spirits " — item, 
brandy  and  unenumerated  spirits,  cologne  water,  and  perfumed 
spirits,  $2.53  to  $3.84  per  proof  gallon,  with  a  round  dozen  of 
other  articles  which  contain  spirits,  and  which,  if  admitted  free  of 
duty,  would  badly  countervail  the  domestic  products  of  the  same 
things  and  uses. 

There  is  a  fourth  class  of  dutiable  articles  in  this  total  list  of 
53,  which  stands  boldly  out,  without  excuse,  as  utterly  exception- 
able to  the  countervailings  of  this/ree  trade  tariff.  Among  them 
is  plate  gold,  charged  $4.08  per  ounce,  and  plate  silver,  $0.36 
per  ounce  ;  the  bullion,  or  raw  material,  being  free.  Upon  the 
fairest  estimate  that  I  have  been  able  to  make  from  the  inexact 
data  at  command,  upon  these  articles,  England  protects  her  own 
manufactures,  by  duties  upon  imports  amounting  to  fifty  millions  of 


INTERNATIONAL   TRADE.  279 

dollars  per  annum,  standing  as  a  barrier  against  the  importation 
of  the  quantity  produced  at  home.  She  does  not  collect  this  sum 
at  her  ports,  but  she  protects  her  own  industries  to  this  amount  of 
their  market  value.  Free  trade  is  thus  shown  to  be  impracticable 
in  fact,  as  it  is  a  mere  pretence  in  the  theory  of  the  country  most 
able  to  adopt  it. 

P,  You  throw  an  emphasis  on  the  word  countervail.  What  is 
the  significance  you  intend  by  putting  it  into  elocutionary  italics 
or  small  capitals  ? 

T.  To  mark  it  with  an  emphasis.  Countervail  is  a  good  word 
— an  excellent  good  word.  In  ordinary  honest  use,  it  means  to 
balance,  to  compensate,  to  defend,  or  even  to  protect ;  and  I  want 
to  use  it  for  the  word  protect,  for  it  means  exactly  the  same  thing; 
but,  as  Mr.  Weller  would  say,  "  it  is  a  more  tenderer  word." 
There  is  a  seductive  delicacy  in  calling  these  duties,  levied  ex- 
pressly as  defences  of  domestic  industry,  countervailing,  or  equal- 
izing duties.  But  as  the  principle  and  purpose  with  which  they 
are  imposed  is  exactly  the  same  as  that  which  we  bluntly  and 
heedlessly  call  protective,  I  want  to  borrow  the  service  of  this 
happy  euphemism.  John  Bull  adopts  the  principle  and  continues 
the  practice  of  protection,  as  far  as  of  necessity  he  must,  because 
the  inland  taxes  or  excises,  which  he  cannot  spare,  raise  the 
prices  of  his  home  products.  And,  may  not  Brother  Jonathan 
lay  such  equalizing  duties  upon  foreign  imports  as  shall  counter- 
vail his  higher  wages  of  labor,  higher  interest  upon  the  capital 
employed,  and  his  heavy  inland  taxes,  which  his  old  friend 
doubled  upon  him,  by  affording  aid  and  comfort  to  the  Southern 
confederacy  ?  Plainly,  Brother  Jonathan  must ;  but  let  him 
eschew  protecting,  and  insist  upon  equalizing  and  countervailing 
his  inequality  of  conditions.  His  rose  will  have  a  pleasanter 
fragrance  under  a  like  change  of  name. 

D.  This  public  document,  like  Falstaff,  is  not  only  witty  in  itself 
but  a  cause  why  wit  is  sometimes  in  other  people  ;  and  you  have 
been  audaciously  poking  fun  at  the  paper  which  you  have  called 
the  "  Statistical  Abstract"  of  1875.  Pray,  what  is  its  authority? 
T.  The  document  is  entitled  "Statistical  Abstract  for  the 
United  Kingdom,  presented  to  both  Houses  of  Parliament  by  com- 
mand of  Her  Majesty,  and  printed  by  the  printers  to  the  Qaeen's 


280  POLITICAL  ECONOMY. 

most  excellent  Majesty,  for  her  Majesty's  Stationery  Office,  1875." 
In  it  you  may  find  the  tariff'  tables  that  I  have  quoted  at  the  15th 
page  of  this  majestic  document. 

D.  Has  not  England,  in  the  fullest  faith  in  her  free  trade 
doctrine,  released  some  imports  from  countervailing  or  protective 
duties  that  do  dispute  the  home  market  with  her  own  products  ? 

T.  In  the  pride  of  an  assured  or  assumed  superiority  she  has 
opened  some  of  her  fabrics  to  a  dangerous  rivalry,  and  she  is  at 
her  wit's  end  to  resist  the  intrusives.  Some  time  ago  the  news- 
papers were  loud  in  complaint  that  French  engines  were  being 
employed  in  their  mines,  and  there  is  a  general  complaint  against 
the  German  and  American  edge  tools  that  are  infesting  their 
markets.  Indeed,  the  manufacturers  are  beginning  to  argue  the 
question  of  protection  over  again,  just  as  if  it  had  not  been  settled 
forever  by  the  "  advanced  intelligence  of  the  age."  At  the  last 
session  of  Parliament,  to  encounter  a  bounty  granted  upon  the  ex- 
port of  refined  sugar  by  Belgium  and  France,  a  Committee  of  the 
House  of  Commons  thinks  that  a  countervailing  duty  must  be 
imposed  for  the  protection  of  the  British  sugar  industries,  that  is, 
its  sugar  refineries.  The  London  Times  is,  of  course,  horrified  at 
the  proposition  to  restore  the  doctrine  or  policy  of  protection  under 
any  dodge  in  the  name  given  to  it.  The  Times  says :  "  The 
disgrace  of  a  Committee  of  the  House  of  Commons  recording 
anti-free-trade  opinion  thirty-four  years  after  the  successful  adop- 
tion of  free  trade  principles  has  actually  been  inflicted." 

D.  Still  the  facts  of  history  ought  to  be  allowed  their  proper 
force  in  the  trial  of  theory.     For  an  instance  : — 

France  for  thirty,  and  in  effect  for  full  sixty  years,  maintained 
protection  and  prohibition  in  the  fullest  force,  yet,  she  yielded  to 
the  demonstrations. of  British  experience,  and  relaxed  her  old  time 
restrictions  upon  foreign  trade  in  the  Cobden  treaty  of  1860  ; 
which  has  been  followed  by  a  great  increase  in  her  commerce. 
This,  certainly,  looks  like  an  advantage  gained  by  her  approxima- 
tion to  free  trade  in  the  provisions  of  the  treaty,  as  the  matter  has 
been  understood  by  the  Lords  Commissioners  of  trade  in  England. 

T.  Stop  a  little.  The  provisions  of  that  treaty  abolished  effete 
restrictions,  which  were  inoffensive,  because  they  were  really  in- 
operative ;  but  the  bargain  between  the  high  contracting  parties 


INTERNATIONAL   TRADE.  281 

left  France  an  average  defence  of  25  to  30  per  cent,  for  such  of 
her  industries  as  were  endangered  hy  free  trade  with  England. 
Now,  this  rate  of  protective  duties  is  more  effective  than  any  that 
we  ever  had,  the  relative  exposure  of  the  respective  conditions 
being  fairly  estimated. 

The  United  States  have,  for  obvious  reasons,  usually  required 
two  or  three  times  the  rates  of  protective  duties  that  would  fully 
suffice  for  France. 

Messrs.  Cobden  and  Bright  did  the  best  they  could  by  that  com- 
mercial treaty  ;  and  they,  and  the  Lords  of  the  British  Board  of 
Trade,  were  bound  to  boast  of  the  success  that  would  serve  for 
indoctrination  of  outside  barbarians  ;  who,  by  the  way,  need  a 
great  deal  of  schooling  to  enlist  them  in  the  discipleship. 

Louis  Napoleon  was  not  overreached  in  the  arrangement  of  that 
treaty.  The  protective  duties  reserved  to  France  are,  in  fact,  a 
model  for  the  application  of  the  principle  of  national  defence  in 
the  items,  according  to  the  varied  necessities  which  it  embraces. 
For  examples  of  adaptation: — The  French  charge  upon  heavy 
wrought  iron  is  $17.58  per  ton;  on  small  wrought  iron  tubes, 
$48.8  ">.  The  other  forms  of  the  metal  are  as  well  and  carefully 
adjusted  to  England's  superiority  in  that  form  of  production; 
although  I  have  heard  of  complaints  by  the  French  manufacturers 
that  England,  being  able  to  make  iron  out  of  almost  anything,  was 
for  a  time  underselling  them.  Silk  tissues,  hosiery,  and  lace  were 
made  free,  because  they  can  protect  themselves.  On  refined  sugar 
3J  cents  per  pound,  a  heavy  rate,  in  defence  of  their  own  beet- 
root sugar.  On  plated  ware  $195.45  per  ton  ;  and  on  cut-glass 
something  less  than  4  cents  per  pound — French  skill  in  these 
goods  being  almost  safe  from  the  highest  and  cheapest  art  of 
England. 

In  general,  from  the  highest  to  the  lowest  rates  of  duty  provided 
for  French  protection,  the  faculty  and  ability  of  France  in  an  even- 
handed  contest  with  her  rival,  are  reflected  as  in  a  mirror  by  the 
provisions  of  this  celebrated  treaty.  One  can  learn  from  it,  by  the 
graduation  of  its  impost  rates,  just  what  France  can  do  for  herself 
in  a  commercial  struggle  with  her  island  enemy  for  the  preserva- 
tion of  her  own  productive  industries  and  arts. 

I).  Facts  are  stubborn  things,  and  figures  have  the  multiplica- 
19 


282  POLITICAL  ECONOMY. 

tion  table  for  their  endorsement.  Two  and  two  certainly  make  four  ; 
and  is  it  not  just  as  clear  that  import  duties  must  add  their  amount 
to  the  cost  of  the  articles  on  which  they  are  charged  ;  and  by  their 
reflected  effect,  as  well  as  by  the  intention  of  their  imposition, 
raise  the  price  of  the  domestic  article  just  as  much  ? 

T.  I  will  give  you  some  facts  and  figures,  bearing  upon  your 
question,  to  digest.  In  the  year  1845  the  duty  upon  imported 
pig  lead  was  three  cents  per  pound.  The  same  sort  of  lead  was 
selling  in  the  New  York  market  at  three  and  a  quarter  cents  per 
pound.  The  Secretary  of  the  Treasury  of  that  day  (R.  J. 
Walker),  arguing  for  the  free  trade  tariff  of  1846,  had  no  diffi- 
culty in  showing  by  figures  arithmetical  that  this  duty  was  almost 
one  hundred  per  cent,  ad  valorem  of  the  selling  price.  In  his 
remedial  tariff  he  reduced  the  duty  to  twenty  per  cent.,  and  lead 
went  up  to  four  and  one-eighth  cents  before  the  year  went  round ! 
Now,  according  to  your  ciphering,  it  should  have  fallen  to  two  and 
a  quarter  cents,  but  it  went  up  to  nearly  twice  that  figure.  Who 
paid  the  enormous  duty  of  100  per  cent,  in  1845  ?  And  who  paid 
the  increased  price  of  nearly  100  per  cent,  under  the  tariff  of 
1846? 

Can  you  tell  me  why  foreign  producers  are  so  busy  and  anxious 
to  reduce,  and,  if  possible,  remove  the  duties  upon  their  exports 
in  our  market  ?  Have  they  any  other  motive  of  interest  than  the 
clear  perception  that  they  pay  the  duty,  or  lose  its  amount  in 
profit,  or  wages,  or  capital  ?  The  producer  bears  all  the  expense 
of  fabricating  his  commodity,  and,  after  that,  all  the  expenses  of 
transportation  and  other  charges  upon  it  before  it  is  fairly  in  the 
foreign  market.  If  a  yard  of  cloth  costs  the  producer  at  home  but 
three  dollars,  and  the  foreign  government  takes  one  dollar  in  the  form 
of  an  import  duty,  it  costs  the  producer  four  dollars  to  produce 
it  in  the  market  to  which  it  is  consigned.  If  it  brings  but  four 
dollars  there,  the  importer  has  no  profit ;  and  if  but  three,  the  duty 
is  crowded  back  upon  the  wages  and  capital  of  the  producer,  and 
he  must  bear  the  loss.  If  it  brings  five  or  six  dollars  per  yard, 
still  the  one  dollar  duty  is  so  much  in  reduction  of  his  profit ;  and 
so,  in  effect,  the  duty  is  paid  by  the  producer. 

D.  Surely  taxes  are  paid  by  the  man  that  pays  them  ;  they 
come  out  of  bis  own  pocket,  and  are  a  reduction  of  his  income. 


INTERNATIONAL   TRADE.  283 

T.  Yes,  taxes  are  so  ;  but  protective  duties  are  not  taxes  upon 
the  consumer.  Get  that  kink  out  of  your  brain.  Quit  ciphering, 
and  think  a  little. 

D.  Why  cannot  the  importer  sell  his  goods  for  as  much  more 
than  their  prime  cost  to  him  as  the  duty  adds  ? 

T.  Now  you  are  on  the  track.  Suppose  that  the  native  manu- 
facturer can  produce  the  cloth  at  four  dollars  per  yard,  the 
foreigner  thus  is  bluifed,.and  cannot  command  more  ;  and  then, 
you  see,  the  importer  must  pay  the  duty ;  that  is,  lose  it  in  the 
price  of  his  goods. 

D.  But  it  costs  the  consumer  that  one  dollar  the  more  ;  and, 
while  it  abates  the  foreigner's  profit  that  much,  it  does  not  at  all 
reduce  the  cost  to  the  consumer ;  and  so,  in  effect,  he  bears  the 
enhancement  of  the  price,  though  the  foreigner  loses  it..  Both  are 
losers,  although  the  one  is  compensated  by  the  other's  loss. 

T.  There  is  one  barrier  to  the  producer's  profit  here  interposed 
to  his  prices, — the  competition  of  the  native  manufacturer.  If  it 
were  tea  or  coffee  that  the  importer  had  to  sell,  the  whole  duty 
falls  upon  the  consumer,  for  he  has  no  defence  against  him  ;  but, 
in  respect  to  things  which  the  native  industry,  under  protection, 
can  produce,  the  case  is  changed ;  and  that  is  the  reason  why 
manufactures,  of  which  the  country  is  naturally  capable,  but  only 
accidentally  incapable,  should  be  fostered. 

If  that  yard  of  cloth,  like  tea  and  coffee,  could  not  be  met  by 
a  competitive  product,  its  price  would  be  wholly  at  the  command 
of  the  importer,  and  he  could  put  it  up  to  five  or  six  dollars,  as 
his  prospect  of  sale  might  determine  him ;  and,  as  against  any 
charge  of  import  duties  for  the  time,  and  consequent  increase  of 
cost,  the  security  against  any  further  advance  is  provided  by  the 
home  competition  through  the  duty  imposed.  Did  you  ever  think 
of  that? 

If  the  foreigner  could  throw  the  burden  of  whatever  price  that  his 
monopoly  of  the  home  market  would  allow  him,  he  could  transfer 
to  the  consumer  that  one  dollar  duty  upon  his  goods.  Protective 
duties,  if  they  do  no  more,  at  least  hold  the  prices  of  foreign 
goods  to  a  fixed  maximum.  I  have  known  opium  to  go  up  to  150 
dollars  per  pound,  simply  because  we  could  produce  none,  and  an 
embargo  on  the  foreign  importation  prevented  a  supply.     There  is 


284  POLITICAL  ECONOMY. 

something  in  industrial  independence,  where  it  is  possible,  worth 
the  cost  of  its  defence.  Blankets  cost  us,  in  the  year  1813,  twelve 
dollars,  which  now  we  can  have  for  three  or  four.  Some  of  the 
burdens  upon  trade  are  prospective  benefits,  which  compensate 
immediate  losses  in  good  time  to  reconcile  us  to  a  temporary 
enhancement  of  current  cost. 

But,  if  import  duties  do  not  fall  in  some  fashion  and  degree  upon 
the  importer,  why  is  England  so  industrious  in  pushing  her  free 
trade  theories  and  commercial  treaties,  looking  that  way,  upon  the 
nations  of  the  Eastern  Continent  ?  And  why  so  lavish  in  expen- 
diture with  the  same  object  among  us,  who  are  her  greatest  and 
best  customers  ?  No  two  free  traders  could  pretend  to  each  other 
that  it  is  merely  philanthropic,  without  laughing  in  each  other's 
faces. 

D.  But  you  must  admit  that  import  duties,  levied  for  the  pur- 
pose of  protection,  must  increase  the  market  price  of  imported 
articles,  because  they  are  imposed  for  that  very  purpose,  and 
that  if  the  consumer  buys  them  he  refunds  the  duty  to  the  im- 
porter. 

T.  Yes  ;  if  the  consumer  is  fool  enough,  or  feeble  enough,  to 
leave  the  field  to  the  importers.  Give  him  the  monopoly  of  the 
market  and  he  will  indemnify  himself,  for  he  is  at  liberty  to  do  so. 

D.  Do  you  venture  to  say  that  the  producer  pays  the  duty  ? 

T.  No.  I  say  that  when,  and  in  whatever  instance,  there  is  no 
domestic  competition,  the  consumer  pays  the  whole  duty,  just  as 
the  citizen  pays  his  internal  taxes  out  of  his  own  resources.  And 
I  say  that  the  foreign  producer  pays  so  much,  or  the  whole  of  the 
duty  imposed,  as  home  competition  compels.  It  is  the  respective 
conditions  of  the  country's  industrial  capability  that  settle  the 
question.  Another  question  must  first  be  settled.  What  deter- 
mines the  market  price  of  the  article  so  charged  ?  In  fur- 
ther support  of  the  doctrine  that  the  producer  sometimes  pays 
the  import  duties,  I  adduce  the  case  of  drawbacks.  What  means 
the  practice  of  drawbacks  equal  to  the  internal  taxes  charged  upon 
manufactures,  when  they  are  exported  ?  Nothing  else  than  that 
the  exporter  cannot  enter  the  foreign  market  if  he  be  not  relieved 
of  the  domestic  duty,  or  excise,  which  is  only  another  way  of  say- 
in"-  that  the  exporter  must,  in  such  cases,  bear  or  pay  the  duty. 


INTERNATIONAL   TRADE.  285 

Countervailing  taxes  or  excises  have  the  same  meaning.  They 
throw  the  charge  upon  the  producer,  not  upon  the  consumer,  that 
is,  upon  the  foreign  producer,  in  relief  of  the  domestic  producer. 
When  England  charges  foreign  spirits  $2.53  per  gallon  in  her 
ports,  is  she  not  clearly  declaring  that  the  producer  must  bear  the 
duty  which  she  imposes  ?  It  is  so  much  burden  and  barrier  upon 
the  foreign  importer,  and  he  must  meet  it  in  abatement  of  his 
profit  in  her  market.  Absolute  prohibition  is  only  so  much  more 
of  the  same  thing ;  and,  surely,  that  all  falls  upon  the  foreigner, 
or,  in  the  meaning  of  this  argument,  the  producer. 

D.  But  it  seems  to  me  that  with  all  this  shifting  of  the  burden 
the  consumer  does  not  escape  it,  nor  is  he  compensated  by  it. 

T.  Let  me  explain.  All  loss  by  protective  duties  is  in  values 
exclusively  ;  while  the  country  gains  productive  power,  by  which 
it  is  enabled  to  gain  a  greater  mass  of  values  ;  or  the  loss  of 
values  is  the  price  of  industrial  training,  to  be  afterwards  compen- 
sated to  the  purchasers  by  even  a  more  than  equivalent  reduction 
of  prices ;  and  presently,  by  the  distribution  of  benefits  through- 
out the  community,  and  to  the  particular  purchaser,  if  he  be 
engaged  in  business,  by  the  reactive  effects  of  such  common  pros- 
perity. 

The  present  compensation  for  enhanced  prices  is  in  the  imme- 
diate result  that  the  agriculture  of  the  country  gains  by  increased 
consumption  of  its  products,  increased  rent  and  exchange-value 
of  real  estate  ;  and  manufactured  products,  under  the  competition 
thus  stimulated,  fall  immediately  in  relative  price.  This  gain  is 
ten  to  one  greater  than  the  loss  by  duty  prices.  Moreover,  pro- 
tection is  not  monopoly,  because  it  is  open  to  home  competition. 
It  is  domestic  free  trade.  It  is  patriotic.  Besides,  it  attracts  the 
skill  and  capital  of  other  countries,  and  always  increases  interna- 
tional trade  in  those  materials  which  it  must  import,  and  by  those 
it  becomes  thus  able  to  export. 

D.  A  little  leaning,  I  perceive,  in  this  outlook  of  advantages 
to  cosmopolitanism,  as  well  as  a  close  devotion  to  nationalism,  and 
exclusiveness.     Permit  me  to  congratulate  you. 

T.  I  am  glad  that  you  are  beginning  to  understand  me.  Phy- 
siologists speak  of  functions  of  the  body  which  have  the  care  of 
the  individual,  and  of  others  which  relate   men  to  the  society 


286  POLITICAL  ECONOMY. 

around  them  and  to  the  external  world.  They  even  recognize 
powers  and  prospects  that  are  concerned  alike  with  the  present 
and  the  future  ;  and  while  they  give  the  individual  the  first  con- 
sideration, they  thereby,  so  far  from  excluding,  see  provision  for 
the  more  and  more  remote  interests  in  the  order  of  their  relation 
to  the  central  interests  of  the  individual  life.  A  system  of 
economy  legitimately  national  must  have  its  policy  as  well  ad- 
justed to  the  great  family  of  nations  as  to  its  own.  But  it  is 
most  nearly  concerned  with  the  interests  which  it  best  understands, 
and  which  are  within  its  special  control. 

Understand,  that  protection  intends  the  fostering  of  manufac- 
tures only  in  circumstances  which  render  them  practicable  and 
expedient.  Observe  that  manufactures  involve  so  many  branches 
of  science  and  art,  and  such  abundance  and  variety  of  laborers, 
and  so  much  acquired  skill,  that  all  attempts  to  force  them  by 
protection  or  prohibition,  prematurely,  is  injurious.  Expediency 
is  its  governing  law.  Capability  and  fitting  conditions  are  pre- 
supposed. The  adoption  of  protection  must  be  adjusted  to,  and  be 
ruled  by,  the  state  of  the  country.  Low  duties,  but  sufficient, 
and  these  upon  the  most  practicable  subjects,  first ;  and  afterwards 
rising  and  spreading  with  the  rising  and  enlarging  ability.  Duties 
(for  protection)  must  not  be  prohibitory,  for  this  argues  incapa- 
city for  the  endeavor,  and  suppresses  emulation  of  the  domestic 
with  the  foreign  manufacture. 

Please  understand  protection  to  mean  only  the  nursing  care 
that  immaturity  requires,  and  so  reconcile  yourself  to  the  guar- 
dianship of  a  nation  over  its  own  infancy.  A  time  comes  to  those 
so  guarded  and  governed,  when  nationalism  and  cosmopolitanism 
meet,  for  as  I  have  said  protection  is  the  route  toward  free  for- 
eign trade.  It  secures  freedom  at  home  that  it  may  be  able  to 
command  it  abroad. 

D.  You  concluded  our  last  conversation  as  if  you  felt  that  you 
were  done  with  its  subject.  But  be  patient  with  me,  for  what  is 
bred  in  the  bone  comes  very  slowly  out  of  the  flesh.  Notwith- 
standing the  felt  force  of  yoiir  doctrinal  principles,  it  seems  to  me 
unquestionable  that  an  import  duty  imposed  upon  a  foreign  article 
must  reflect  an  increase  of  price  upon  the  domestic  intended  to  be 


INTERNATIONAL   TRADE.  287 

protected  thereby  in  the  home  market — I  cannot  see  how  this  re- 
sult can  be  escaped. 

I  have  been  reading  the  Official  Report  of  the  Special  Commis- 
sioner of  the  Revenue  made  to  Congress  in  December,  18G9.  He 
says,  in  so  many  words,  that  a  reduction  of  the  duty  upon  any 
foreign  goods  would  necessarily  be  followed  by  a'  corresponding 
reduction  in  the  price  of  the  domestic  article  of  the  same  kind. 
In  exemplification — the  effect  of  a  remission  of  $750,000  duty  upon 
foreign  pig  iron  in  the  fiscal  year  1867-8,  Avould  be  a  relief  to  the 
consumers  of  the  domestic  article  of  no  less  than  $10,800,000,  by 
the  resulting  reduction  of  its  market  price.  The  like  reduction 
upon  domestic  salt,  of  $600,000  duty  upon  the  imported,  would 
result  to  the  consumers  quite  $3,900,000  per  annum.  On  four 
classes  of  imports  charged  with  heavy  duties  he  estimates  the  re- 
duction of  prices  that  would  follow  their  free  admission  at  no  less 
than  $48,700,000  to  the  consumers  of  the  home  product,  resulting 
from  the  reflected  effect  of  $6,112,000  duties  released  upon  the 
competing  foreign  articles. 

Now,  if  there  is  truth  in  arithmetic,  an  aggregate  of  6  millions 
of  duties  upon  foreign  goods  levied  for  the  purpose  of  raising  prices 
upon  domestic  productions,  and  having  that  intended  effect,  must 
be  a  tax  of  48  millions  upon  the  consumers  ;  if  eight  times  the 
quantity  of  the  domestic  are  thus  brought  up  to  confront  the 
quantity  imported,  I  verily  believe  that  8  times  6  make  48. 

T.  Clear  as  mud!  For  explication  and  exposition,  too,  let  us 
borrow  the  Special  Commissioner's  slate  and  his  arithmetic.  The 
official  value  of  all  the  foreign  goods  charged  Avith  import  duties 
which  met  the  competition  of  American  products  in  our  market  in 
the  year  chosen  for  his  demonstration,  was  $178,000,000.  The 
average  of  the  duties  was  a  small  fraction  less  than  48  per  cent. 
The  product  of  American  manufacturers  for  the  year  1859  was, 
by  the  census  of  1860,  given  at  1885  millions.  I  estimate  the 
increase  upon  this  amount  in  1867-8  at  85  percent.  It  was  much 
more,  I  doubt  not,  but  certainly  so  much.  This  would  bring  our 
manufactured  products  in  first  hands  up  to  3487  millions.  Now 
if  this  mass  of  prime  values  was  increased  48  per  cent,  by  the  re- 
flected effect  of  the  protective  duties  imposed  upon  their  foreign 
rivals  in  our  market,  they  must  have  been  thereby  surcharged  to 


288  POLITICAL  ECONOMY. 

home  consumers  the  enormous  amount  of  $673,760,000 — nearly 
nine  and  a  half  times  the  amount  of  the  revenue  secured  to  the 
Treasury  hy  the  protective  duties  of  the  year — at  the  cost  of  1759 
millions  to  the  consumers  of  the  domestic  and  foreign  goods  to- 
gether ;  or  making  their  market  price  about  one-half  more  than 
their  prime  value,  that  is,  the  cost  of  their  production  under  free 
trade. 

This  is  at  once  frightful,  atrocious,  horrible,  and  Ridiculous  ! 

D.  How  so  ? 

T.  If  this  economic  logic,  backed  by  its  immeasurable  arithmetic, 
were  practically  true,  the  consequence  would  be  that  the  smaller 
the  proportion  of  duty-paying  imports  to  the  domestic  supply  the 
heavier  would  be  the  tax  upon  them.  Thus,  if  our  own  product 
of  a  given  article  equals  our  import,  say,  to  the  value  of  10  mil- 
lions each,  and  the  duty  is  25  per  cent.,  the  increased  price  upon 
the  domestic  article  would  be  2|  millions.  If  the  domestic  product 
be  100  millions  and  the  import  duty  only  10  millions,  the  duty 
reflected  in  increase  of  price  at  25  per  cent,  upon  the  domestic 
Would  mount  up  to  25  millions.  The  arithmetical  or  free  trade 
consequence  is  that  we  must  not,  for  the  sake  of  the  consumer,  lay 
any  duty  at  all  upon  foreign  products  which  compete  with  our  own, 
but  should  collect  all  our  customs  revenue  exclusively  from  such 
articles  as  Ave  do  not  or  cannot  produce. 

Is  this  cosmopolitanism  or  free  international  trade  ?  Or  is  it  a 
"  Chinese  wall "  built  to  dike  out  that  mutual  interchange  of  sup- 
plies which  is  providentially  intended  to  make  the  whole  world 
kin  ? 

D.  Let  me  see  : — If  import  duties  have  the  effect  of  increasing 
the  prices  to  consumers,  we  should  not  impose  them  upon  the  pro- 
ducts of  which  we  are  capable,  because  they  multiply  in  proportion 
to  our  capability  of  production — -that  seems  true.  And,  if  so,  all 
import  duties  must  be  merely  taxes  upon  consumption.  This  is 
more  than  I  bargained  for.  The  multitude  are  the  consumers, 
and  a  tax  upon  them  is  not  according  to  ability  to  bear  it.  Assess- 
ments according  to  values  of  property  are  fair,  but  taxes  on  con- 
sumption fall  heavily  upon  necessaries  ;  they  ought  to  fall  only 
upon  enjoyments,  or  the  advantages  which  government  secures  to 


INTERNATIONAL   TRADE.  289 

their  possessors,  for  property  is  only  that  which  the  public  law 
declares  to  be  such,  and  which  it  defends.  I  am  embarrassed. 
Look  here,  Mr.  Teacher,  if  values  in  consumption  are  not  the  rule 
of  taxation,  how  comes  it  that  ad  valorems  figure  so  largely  in 
tariff'  lists  ? 

T.  They  are  aliens  to  the  principle  of  protective  duties.  Some 
articles,  which  cannot  be  described  by  weight,  number,  or  other 
enumeration,  must  be  so  estimated  and  assessed  ;  but  no  purely 
protective  system  regards  the  values  of  its  subjects.  It  is  not  tax- 
ation in  spirit  or  purpose,  and  obeys  none  of  its  rules. 

The  tariff  of  1846  was  discriminative  and  protective  in  its 
promise,  but  was  vitiated  in  its  details  by  the  substitution  of  ad 
valorem  for  specific  duties  ;  and  in  this  it  disappointed  the  trust 
which  it  invited.  Sound  protective  tariffs  utterly  repudiate  ad 
valorem  duties,  wherever  they  are  avoidable,  for  their  inherent 
frauds  and  infidelity  to  their  object,  even  where  they  are  honest. 
An  ad  valorem  rate  is  in  conspiracy  with  undervaluations  to  cheat 
the  revenue,  and  disappoint  the  hope  of  protection.  In  their 
capriciousness  of  operation  they  are  always  highest  when  they  are 
not  wanted,  and  always  lowest  in  yield  and  use  when  most 
wanted.  All  experience  repudiates  them,  wherever  they  can  be 
avoided.  England  imposes  duties  upon  artificial  flowers  by  the 
cubic  foot,  specifically,  to  avoid  the  fraud  of  undervaluation,  and 
the  continental  nations  generally  impose  duties  by  the  pound  upon 
cutlery  for  the  same  reason,  which,  by  the  way,  compels  the  better 
and  best  articles  of  import,  for  they  better  bear  the  impost.  If 
a  fine  razor  pays  no  more  than  a  poor  one,  it  is  preferred  by  the 
importer,  and  the  market  is  so  much  the  better  supplied.  Ad 
valorems  are  the  crimes  and  cheats  of  import  duties. 

D.  By  the  way,  what  is  the  theoretic  objection  to  throwing 
taxation  upon  consumption  ?  Is  it  not  like  rent  and  interest  upon 
property  and  income  ?  Ought  not  every  man  pay  for  what  he 
uses,  and  pay  the  government  for  the  care  that  secures  him  in 
enjoyment  in  proportion  to  his  use  ? 

T.  You  are  now  opening  up  for  consideration  the  principles  of 
taxation, — a  question  too  large  for  our  limits.  I  must  content  or 
limit  myself  to  taxation,  as  a  policy  or  expediency,  which,  I  think, 
will  meet  the  drift  of  your  question  in  its  present  pertinency. 


290  POLITICAL    ECONOMY. 

Assessment  according  to  consumption  would  be  neither  equitable 
nor  practicable.  Indeed,  neither  income  nor  property  value  can 
be  made  a  basis  of  rates.  Neither  theory  nor  experience  have 
found  a  philosophic  system  of  taxation.  In  practice  the  rule,  that 
the  exaction  must  be  according  to  ability  and  availability,  over- 
rides all  other  general  principles.  The  possible  bounds  the  prac- 
tical ;  and,  even  if  humanity  and  the  common  welfare  were  out  of 
the  question,  a  ratio  or  percentage,  upon  consumption  would  still 
be  impracticable,  which  is  another  reason  why  imposts  for  revenue, 
governed  by  the  rules  and  rates  of  taxation,  are  inadmissible,  un- 
merciful, and  undemocratic  in  principle,  for  it  would  raise,  perhaps, 
nine-tenths  of  the  public  charges  from  the  class  or  classes  that  have 
not  more  than  one-tenth  of  the  ability  to  pay  them.  Oh,  no  !  those 
who  live  from  hand  to  mouth  must  not  be  taxed  on  their  tea  and 
coffee  in  proportion  to  their  numbers,  or  as  thousands  to  one  of 
the  wealthier  classes.  On  the  contrary,  Protection  has  in  it  that 
sort  of  class  legislation  which  kindly  considers  and  tenderly  dis- 
criminates among  its  impositions,  fitting  the  burden  to  the  back. 

A  tax  upon  consumption,  like  a  capitation  tax,  in  the  present 
order  or  disorder  of  civilization,  working  like  an  automaton,  would 
be  insensible  to  conditions,  and,  respecting  numbers  only,  would 
ruthlessly  excise  all  ages  and  capabilities  of  men,  women,  and 
children,  counting  the  millionaire  and  the  chambermaid,  each  alike, 
and  respectively  one,  under  the  levelling  ratio  of  its  exactions. 

You  must  see  that  all  men  are  not  equal  before  all  the  laws 
which  affect  them.  And  let  me  ask  you  to  notice  that  those 
apothegms,  or  abstract  logical  propositions,  on  which  free  trade  so 
confidently  builds  itself,  must  in  practice  be  applied  with  a  differ- 
ence, as  Ophelia,  like  the  fates,  distributed  her  rue. 

P.  We  have  never,  since  the  organization  of  the  Federal  gov- 
ernment, had  what  our  English  friends  would  call  a  free  trade 
tariff.  The  nearest  approaches  to  it  have  been  "  tariffs  for  rev- 
enue only"  and  "  tariffs  for  revenue,  with  incidental  protection." 
Their  ruling  principles,  a  good  deal  mixed  with  policy,  and  cross- 
cut with  necessity,  are  uncontrollable  by  any  principle.  How 
have  they  worked  and  resulted  ? 

T.  Uniformly  in  failure,  gross,  palpable,  disastrous  failure  ; 
failure  in  the  very  matter  of  revenue,  to  which  they  were  specially 


INTERNATIONAL   TRADE.  291 

directed  ;  and  disaster  to  the  national  credit,  through  their  ruinous 
effect  upon  the  business  of  the  commnnity, — personally  and  di- 
rectly by  checking  domestic  industry, — so  that  the  people  could 
neither  buy  the  promised  cheaper  imports,  nor  meet  the  usual 
domestic  taxation.  A  tariff*  for  revenue  by  its  very  terms  is  a 
tax  transferred  from  the  household  to  the  custom-house.  A  tariff 
for  protection,  on  the  contrary,  says  explicitly,  tax  the  foreign 
product,  and  set  the  domestic  labor  and  capital  free  to  meet  their 
proper  share  of  the  exigencies  of  the  national  treasury.  It  says 
to  the  people  :  I  give  you  full  employment,  in  the  assurance  that 
you  will  be  able  to  buy  largely  of  foreign  products,  and  to  con- 
sume liberally  of  our  native  products.  I  make  your  wages  and 
profits  at  once  adequate  to  supply  the  exchequer,  and  your  own 
necessities  and  enjoyments. 

That  our  protective  tariffs  have  not  been  in  any  degree  pro- 
hibitive of  foreign  trade  is  overabundantly  proved  by  the  history 
of  the  customs  duties  always  greatly  enhanced  by  them.  They 
have  time  and  again  always,  without  an  exception,  refuted  the 
theory  of  their  opponents. 

D.  This  doctrine,  or  this  inference  from  experience  quoted,  would 
seem  to  me  a  paradox.  Surely  burdens  upon  imports  must  be  re- 
strictive of  foreign  trade,  but  you  affirm  that  they  are,  curiously 
enough,  promotive  of  the  very  international  exchanges  against 
which  they  are  levelled.     How  is  this  ? 

T.  Why,  my  dear  sir,  purchasing  and  paying  are  reciprocals. 
Consumption  does  not  depend  upon  supply,  but  supply  depends 
upon  consumption.  A  merchant's  goods  rot  and  rust  in  his  ware- 
house when  he  has  no  customers,  and  he  can  have  no  customers 
but  those  who  are  able  to  pay.  Prices  have  no  arbitrary  effect ; 
they  are  relative  to  the  means  of  purchasing.  On  the  wages  of  a 
dollar  a  day  I  am  as  able  to  purchase  as  on  half  a  dollar  a  day  at 
half  prices,  and  if  I  am  in  enforced  idleness  I  can  purchase  noth- 
ing. A  growing  boy  will  face  the  winds  that  would  wither  a  con- 
sumptive. Economic  problems  are  not  worked  by  the  single  rule 
of  three,  of  which  the  factors  are  abstract  statistical  figures.  They 
come  under  a  double  rule  of  proportion,  in  which  the  means  on  one 
side  govern  the  measures  on  the  other.  How  silly  it  is  to  say  that 
if  the  money  price  of  an  article  be  increased,  it  is  thereby  put  so 


292  POLITICAL    ECONOMY. 

much  further  out  of  reach.  If  the  means  of  attainment  are  at  the 
same  time  equally  or  more  greatly  increased,  the  cost  being  fixed, 
what  becomes  of  your  ciphered  destitution  ? 

P.  We  were  amused  by  Abraham  Lincoln's  homely  saying 
that  it  is  easier  to  pay  a  good  deal  if  you  have  still  more,  than  a 
little  if  you  have  less.  In  that  truism  I  think  he  anticipated  and 
at  the  same  time  clinched  your  theory  of  prices. 

D.  The  subject  is  broader,  I  perceive,  than  abstractions  embrace. 
And  this  is  the  reason,  perhaps,  that  confidence  is  found  to  be  too 
hastily  given  to  aphorisms  and  apothegms,  which  at  first  blush 
appear  to  stand  self-proved,  and  do  not  need  cross-examination. 
Give  me  time  to  reflect,  or  if  you  can,  accommodate  me  with  the 
points  made  in  this  debate. 

T.  It  avouIcI  be  as  tedious  as  unnecessary  to  give  you  the  in- 
stances either  in  particulars  or  in  categories,  which  prove  that  pro- 
tective duties  levied  in  the  strictness  of  the  principle,  always  secure 
the  consumer  from  arbitrary  prices  by  preventing  monopolies  in 
trade — that  they  always  in  good  time  reduce  prices  to  the  level  of 
the  general  rewards  of  labor  and  capital — that  they  throw  their 
burden  upon  the  importer  in  the  ratio  of  their  efficiency,  when 
judiciously  adjusted  to  the  capabilities  of  the  country — that  they 
always  repay  an  hundredfold  any  temporary  increase  of  prices  by 
putting  every  variety  of  capability  to  profitable  employment — 
that  they  increase  the  wages  of  labor  and  the  profits  of  capital 
more  than  commensurately,  immediately,  to  all  consumers  who  are 
partners  in  the  business  of  the  time,  and  raise  to  more  than  equiv- 
alence, the  exchange  value  and  the  rents  of  property  in  relief  of 
the  cost  of  sustenance,  and  whatever  of  taxation  may  fall  upon  the 
owners. 

Only  annuitants,  office-holders  upon  fixed  salaries,  and  idlers, 
living  upon  past  accumulations,  can  possibly  be  burdened  by  their 
operation  ;  which  is  justified  by  the.  necessity  that  the  live  world 
must  not  be  arrested  in  its  progress  for  the  accommodation  of  its 
sleeping  partners. 

P.  I  have  just  now  seen  a  report  of  the  Chief  of  the  Bureau  of 
Statistics,  giving  our  foreign  trade  from  1861  to  1880.  It  seems 
to  me  conclusive  against  the  charge  that  protection  is  restrictive 
of  international  trade.    In  the  first  fiscal  year,  1861,  which  ended 


INTERNATIONAL   TRADE.  203 

on  the  30th  of  June  of  that  year,  we  were  still  under  the  nearly 
free  trade  tariff*  of  1857.  The  net  import  of  foreign  merchandise 
of  that  year,  in  gold  values,  was  §274,656,325.  In  1880,  under 
protective  duties,  they  were  $656,198,440,  almost  two  and  a  half 
(2.39)  times  more.  That  for  the  buying — now  for  the  selling. 
In  the  year  1861  we  exported  of  domestic  products  $204,899,616, 
and  in  1880  $824,106,790,  something  above  four  times  (4.02) 
more  than  in  1861.  Further,  remark,  that  under  the  nearest  pos- 
sible approach  to  free  trade  the  buying  was  25  per  cent,  greater 
than  the  selling  ;  and  in  1880  the  selling  was  27 ^  per  cent,  more 
than  the  buying ;  and,  in  the  aggregate,  the  total  foreign  trade  of 
1861  was  but  $479,555,941,  but  the  total  of  1880  was  $1,480,305,- 
239.  Thus  the  total  foreign  trade  had  increased  above  three  times 
(3.08)  under  the  protective,  over  the  free  trade  tariff",  which  had 
its  full  sweep  before  the  beginning  of  the  Rebellion.  So  it  seems 
that  we  can  both  buy  and  sell  under  the  rule  of  a  defensive  policy; 
and  so  the  logic  in  the  phrase,  "  if  you  do  not  buy  you  cannot 
sell,"  as  the  effect  of  protective  rates  upon  foreign  imports  vanishes 
at  the  touch  of  experience. 

I  observe,  moreover,  in  support  of  your  doctrine  that  all  non- 
competing  imports  should  be  exempt  from  imposts,  which  not  being 
protective  in  operation  should  not  be  taxed  ;  that  the  tariff*  lists 
published  by  the  Bureau  make  free  of  duty  all  tropical  productions, 
and  all  such  commodities  as  do  not  interfere  with,  but  rather  pro- 
mote our  industries — such  as  coffee,  tea,  cocoa,  medicines  of  the 
growth  of  warm  climates,  dye  stuffs,  gutta  percha,  grasses  for  the 
manufacture  of  paper,  and  nearly  every  kind  and  quality  of  goods 
that  we  cannot  produce,  with  a  very  feAV  exceptions,  of  unimportant 
value,  such  as  wools  coarser  than  can  be  grown  in  our  climate, 
which  on  principle  ought  to  be  exempted  from  duty,  where  they  do 
not  displace  our  home  products. 

I).  You  have  several  times  spoken  of  protection  and  of  free 
trade  as  if  they  were  not  fixed  principles  of  public  economy,  but 
only  means  adjustable  to  the  variant  conditions  of  communities — 
expediences,  rather  than  laws  or  philosophic  rules,  arbitrary  in 
application. 

T.  Right  as  to  the  point  in  general  statement,  but  subject  to 
such  necessary  modification   as   must  protect  such   propositions, 


294  POLITICAL   ECONOMY. 

made  in  the  currency  of  discussion,  from  over-sharp  construction. 
By  the  phrase  free  trade,  when  I  have  spoken  of  it  as  the  out- 
come of  a  policy  required  to  prevent  rivalry  in  domestic  and  for- 
eign markets,  I  meant  that  wild  fantasy  avowed  by  the  unreflective 
of  the  party  of  free  traders,  which  allows  and  requires  utter  de- 
fencelessness  under  all  circumstances,  as  if  the  whole  world  were 
one  great  consolidated  confederacy,  or  republic  of  merchants ; 
allowing  all  inequalities  of  conditions  and  capabilities  to  work  as 
they  may,  with  the  chance  of  survival  only  to  the  strongest — with 
no  provision  against  casualties;  no  defence  against  abuses;  no 
shelter  for  the  weakness  of  immaturity — a  brutal  rule  of  might 
against  right  ;  in  a  word,  a  logical  law  of  practical  lawlessness  ! ! 
The  essence  of  government  is  protection,  whether  the  agencies 
and  methods  be  directory,  punitive,  providential,  or  otherwise 
remedial.  Human  societies  are  not  yet  in  the  order  in  which  it 
is  promised  that  "He  shall  have  put  down  all  rule,  and  all  author- 
ity and  power,  for  He  must  reign  till  He  has  put  all  enemies 
under  his  feet,"  and  "  the  lamb  may  safely  lie  down  with  the 
lion." 

I  have  not  in  any  use  of  the  term  regarded  free  trade  as  it  is 
calculated  for  the  millennium  !  On  the  contrary,  I  do  not  believe 
that  in  so  broad  a  sense  the  principle  can  be  established  among 
diverse  nations  and  people,  even  under  a  universal  federation  and 
a  universal  peace.  Even  if  all  nations  were  equal  in  capital  and 
skill,  labor-power,  and  all  the  facilities  and  appliances  of  indus- 
trial production,  might  not  a  mischievous  competition  ensue,  mak- 
ing it  necessary  to  put  up  defences  against  aggression  ?  But  such 
considerations  as  these  apart,  the  universalists  of  trade  restrict 
their  policy  to  international  exchanges.  Their  doctrine,  and  its 
regards  are  not  free  trade,  but  free  foreign  trade  ;  free  domestic 
trade  being  totally  disregarded.  Of  course  I  never  mean  such 
free  trade  as  this,  when  I  speak  of  it  as  the  issue  of  a  sound 
commercial  policy. 

D.  Restriction  upon  foreign  trade  is  the  only  thing  that  they 
are  called  upon  to  resist.  As  for  domestic  commerce,  that  is 
entirely  under  the  laws  of  nature,  or,  otherwise  expressed,  under 
the  common  law  of  demand  and  supply,  and  will  take  care  of 
itself. 


INTERNATIONAL   TRADE.  295 

T.  But  foreign  trade  must  be  under  the  same  law,  or  some  law. 
If  it  be  a  universal  one,  its  supplies  come  into  competition  Avith  the 
domestic  in  the  common  market,  and  if  competition  is  in  effect 
the  war  of  trade,  defence  against  it  is  justified.  Their  antagonism 
makes  their  relative  economic  values  a  matter  of  moment  in  the 
controversy. 

Fairly  stated  the  conflicting  forces  stand  thus :  No  nation  or 
people  derive  more  than  one-tenth  of  their  consumption  from  for 
eign  nations.  This  is  the  whole  strength  of  the  commercial  tie 
that  binds  distant  regiops  and  different  interests  in  the  legitimate 
bonds  of  brotherhood.  The  diversely  situated  and  conditioned 
peoples  of  the  globe  are  not  twins  or  triplets  or  sextuples  of  each 
other.  Their  exchange  relations  are  a  limited  partnership,  not  a 
communism.  The  resulting  necessary  and  healthful  exchange  of 
commodities  between  them  does  not  really  exceed  five  per  cent,  of 
their  respective  requirements,  or  inter-dependency.  An  amount 
equal  to  one-twentieth  of  their  own  products  is  the  measure  and 
limit  of  natural  commerce,  and,  measured  by  the  industries  which 
do  not  appear,  and  are  not  measured  by  market  prices,  such  as 
household  and  professional  occupations,  they  are  not  effectively 
one  in  a  hundred  in  the  value  of  uses  ;  all  of  which  suffer  more 
or  less  by  invasion,  directly  or  indirectly,  and  always  injuriously. 
But,  waiving  all  these  mischiefs,  for  their  incalculable  economic 
results,  if  we  take  the  usual  imports  at  one-tenth  of  a  people's 
consumption,  it  is  clear  that  the  producers  of  the  nine-tenths 
ought  not  to  be  put  into  restraint  by  the  other  tenth. 

D.  One  other  difficulty  must  be  disposed  of,  I  think.  It  is  con- 
ceded that  the  scholars  and  leaders  in  literature,  and  in  economic 
philosophy,  generally  accept  and  advocate  the  system  of  thought 
and'doctrine  which  you  so  zealously  oppose.  How  do  you  recon- 
cile your  conservatism  with  the  leanings  of  the  advanced  intelli- 
gence of  the  time  ? 

T.  The  free-trade  school  could  take  the  subjects  of  political 
economy  out  of  the  domain  of  sound  discretion,  experience,  and 
common  sense  only  by  making  a  science  of  it — by  converting 
and  transfiguring  the  business  of  life  into  a  set  of  abstractions ; 
just  as  the  Aristotelian  syllogism  proves,  logically,  that  a  man  is 


296  POLITICAL   ECONOMY. 

a  goose,  because  both  man  and  goose  are  animals,  thence  the 
inevitable  corollary. 

D.  Correspondence  in  a  single  particular  may,  however,  be  a 
measure  of  general  conditions.  Gladstone,  for  instance,  estimates 
the  growth  of  the  general  wealth  of  Great  Britain  by  the  growth 
of  the  income  tax.  Apparently  trivial  incidents  are  indications 
of  the  most  general  facts.  In  Washington  City  you  do  not  find  a 
front-door  scraper  at  any  recently  built  house, — showing  the  gen- 
eral great  improvement  of  the  city,  especially  of  the  streets  and 
pavements,  which  are  now  wholly  free  from  mud.  Straws  show 
how  the  wind  blows. 

T.  Mr.  Gladstone,  in  1866,  used  the  money-worth  of  the  British 
exports,  as  a  measure  of  its  surplus  productions.  He  did  not  un- 
dertake the  problem  of  the  kingdom's  welfare.  If  he  had,  he 
would  have  been  obliged  to  consider  some  of  the  troubles  which 
now,  as  Prime  Minister,  he  finds  almost,  if  not  quite,  unmanage- 
able. Such  as  the  enforced  emigration,  the  pauperism,  the  dis- 
content, the  crushing  dependency  upon  foreign  markets,  the 
starving  necessities  of  her  manufacturers,  including  her  book- 
makers ;  the  one,  despairingly  struggling  to  establish  free  trade 
abroad,  and  the  others  begging  for  copyright ;  both  meaning  that 
if  we  don't  buy  and  pay  they  cannot  live.  He  has  on  his  hands, 
besides,  Irish  famine  and  threatened  insurrection,  with  a  fearful 
brood  of  other  refractory  chickens  which  are  stretching  the  wings 
of  the  mother  bird  to  their  very  tips. 

D.  One  thing  more  and  I  am  done.  You  allow  the  expedient 
a  commanding  influence  against  the  theoretical.  How  does  this 
principle  work  upon  the  populace  of  a  republic,  in  a  case  that  re- 
quires present  sacrifice  in  the  matter  of  prices  of  the  commodities 
of  daily  consumption,  under  a  postponed  expectation,  or  a  glim- 
mering perspective  of  future  compensation  ?  If  your  protective 
tariff  enhances  prices,  and  continues  to  enhance  them  until  do- 
mestic enterprise,  labor,  improved  skill,  and  home  competition 
shall  possibly  reduce  them  again,  how  can  you  induce  the  people 
who  live  from  day  to  day,  and  those  whose  increased  expenses 
fall  upon  them,  also,  from  day  to  day,  to  live  on  trust  through  the 
certain  interval  and  its  uncertainty  of  success  ? 

T.  Oh !     A  statesman  must  follow,   not  lead  the   mob.     He 


INTERNATIONAL    TRADE.  297 

must  be  the  worst  of  them  if  he  would  get  the  better  of  them — 
the  vox  populi  is  the  vox  Dei  for  him,  and  democracy  believes  in 
self-government  only  because  it  will  have  its  way,  and  expediency 
is  nothing  after  all  but  popularity  ! !  So  I  understand  your  de- 
mocracy. This  may  be  the  demagogue's  philosophy  ;  but  it  is  not 
history.  I  do  not  say  that  the  populace  can  see  through  a  mill- 
stone, but  they  can  feel  its  grinding ;  and  when  theories  eventuate 
themselves  in  palpable  facts,  every  people  will  understand  them 
without  the  critical  ability  of  abstract  speculation. 

But,  ad  Jiominem,  the  party  which  holds  that  every  man  is  the 
best  judge  of  his  own  interests,  concedes  the  competency  of  the 
common  people  who  rule  the  nation  by  their  votes  to  administer 
their  own  affairs  wisely.     Take  that. 

If,  however,  the  practicability  of  protective  legislation,  looking 
away  from  prices  to  the  higher  and  more  permanent  creation  of  a 
power  which  promises  to  produce  values,  were  doubtful  in  pros- 
pect, the  policy  is  not  in  that  tribulation.  It  is  not  a  telescopic 
squint  at  a  distant  result.  Its  effects  are  immediate,  instant. 
What  you  call  its  prospects  are  the  substance  of  things  hoped  for, 
as  well  as  the  evidence  of  things  foreseen.  Protection  does  not 
look  at  prices  nor  scare  at  them.  It  looks  to  power  over  prices 
present,  as  well  as  prospective,  and  equally  realizes  both.  The 
nunc  stuns  is  in  its  grasp.  The  permanency  of  absolute  law  is 
its  faith,  and  believing  in  the  certainty  of  cause  and  effect,  it  has 
the  now  for  inspiration  as  effectively  as  the  fu.ture  for  experience. 
To  reduce  the  proposition  from  theory  to  practice," observe  that  all 
enterprise  is  on  the  spring  of  the  prospective.  It  is  not  what  to- 
day is,  but  what  to-morrow  shall  bring  forth  that  governs  its  im- 
pulses and  ventures. 

Say  a  revival  of  industry  and  its  rewards  are  not  only  depen- 
dent upon  the  issues  of  a  given  policy,  but  even  say  the  actual 
operation  of  the  agencies  concerned  is  postponed  to  a  day  six 
months  after  the  date  of  the  legislative  act.  The  assurance  which 
it  gives,  instantly  brings  forth  the  capital  and  awakes  the  credit 
of  preparation,  and  the  nation's  prosperity  is  born  in  a  day.  Not 
only  credit,  but  hope  is  capital ;  because  inspiration  is  power. 

Nobody  but  democrats  doubt  or  fear  the  democracy.  I  mean 
the  representatives  of  the  people,  or  the  people  themselves,  when 
20 


298  POLITICAL  ECONOMY. 

they  have  the  time  to  judge  policies  by  their  results.  In  the  late 
Presidential  election  the  question  of  protection  was  fairly  in  issue, 
and  being  well  understood  in  its  operation  upon  the  general  pros- 
perity, it  was  intelligently  supported.  I  do  not  assume  that  a 
political  Congress  can  wisely  adjust  the  details  of  a  tariff  law,  but 
the  community  can  judge  it  by  its  fruits.  The  British  Parliament 
knows  very  well  that  it  is  not  competent  to  arrange  the  rates  of 
import  duties  safely  and  justly  ;  it  therefore  delegates  the  duty  to 
experts,  and  accepts  their  report.  In  1852  the  Parliament  ap- 
pointed a  commission  for  this  purpose,  and  without  further  inquiry 
confirmed  its  recommendations  ;  and  notably,  the  object  of  that 
appointment  was  mainly  to  get  rid  of  the  ad  valorem  duties  in  the 
schedules  then  existing,  although  of  the  twenty  millions  of  gross 
yield  to  the  revenue,  not  more  than  one-quarter  of  a  million  came 
from  that  rag-and-tae  mode  of  assessment. 


CHAPTER  XX. 
CLOSE  OP  THE  DEBATE. 

D.  You  have  impressed  me  with  the  opinion  that  the  knowledge 
of  business  affairs  does  not  lie  open  upon  their  surface  reports  ;  that 
a  lazy  common  sense,  or  the  conceit  of  it,  is  not  a  philosophic 
directory  of  societary  relations  and  conduct ;  and  that  every  man's 
opinions  are  not  as  good  as  every  other  man's,  and  a  great  deal 
better.  That  every  man  has  a  right  to  think  for  himself  must  be 
conceded,  whether  he  thinks  wisely  or  otherwise,  even  in  matters 
so  hard  to  understand  that  no  one  surely  knows  who  understands 
them.  In  questions  of  law  and  medicine  deference  is  usually 
given  to  experts  ;  but,  on  the  subjects  of  social  and  economic 
science,  everybody  is  at  liberty,  and  everybody  must  be  com- 
petent, of  course,  because  there  is  no  admitted  court  of  appeal 
and  final  authority,  and  there  is  no  decision  which  every  man  is 
bound  to  respect. 

Pardon  me,  I  am  rather  confused  by  the  discussion.     I  was  so 


CLOSE    OF    THE    DEBATE.  299 

comfortable  before  these  conversations  began.  Everything  that  I 
believed,  or  thought  I  believed,  was  unquestioned,  because  it  was 
a  priori  unquestionable.  I  had  what  bookkeepers  call  the  foot- 
ings of  all  accounts,  and  felt  perfectly  posted  as  to  the  balance  of 
the  pros  and  cons  of  every  question  under  discussion.  But  you 
have  so  ruthlessly  run  the  ploughshare  of  cultivation  through 
the  surface  of  the  flowery  field,  and  torn  it  open  for  the  seed  and 
crdss-harrowing  of  industrial  culture,  that  I  am  turned  into  a  pains- 
taking laborer,  when  I  had  thought  that  I  was  a  leisurely  in- 
spector of  a  gathered  harvest  of  results.  But  I  thank  you  for  all 
the  trouble  you  have  given  me.  By  the  help  of  your  method  of 
study  I  have  the  hope  that  hereafter  I  may  know  assuredly  the 
things  that  I  shall  learn,  and  be  so  much  the  less  inclined  to 
assume  the  things  that  I  do  not  assuredly  know. 

P.  I  had  no  prepossessions  to  embarrass  me,  because  I  did  not 
suppose  that  I  knew  anything.  But  I  needed  to  be  disembarrassed 
of  an  irreflective  reverence  for  the  popular  or  accepted  authori- 
ties, which  checked  inquiry  and  growth  in  appropriated  knowledge. 
I  feel  obliged  to  our  teacher  for  a  wholesome  release  from  the 
hackney  logic  of  the  economic  sects,  generally  used  to  assure  their 
disciples,  though  incapable  of  convincing  anybody  else.  I  con- 
fess, however,  that  I  am  in  some  danger  of  laughing  at  the  cur- 
rency logic  of  the  illustrious  system  makers,  and  of  doubting  the 
exercise  of  reasoning  in  the  data  of  statistics. 

T.  I  have  not  intended  in  these  conversations  to  teach  you  an 
unreasoning  skepticism  in  respect  to  figures  or  facts,  but  to  use 
your  reason  under  common  sense  rules.  If  I  have  been  critical 
in  the  study  of  our  subjects,  and  of  opinions  concerning  them,  I 
intended  only  to  put  up  cautionary  warnings,  where  theories  were 
driving  along  at  railroad  speed,  that  you  should  "  look  out  for  the 
engine"  at  the  cross-roads  and  switch-tracks  that  stand  open, 
endangering  accidents  by  the  way. 


APPENDIX  A. 


Profortion  of  bank  cheques,  bank  notes,  bills,  drafts, 
and  coin  respectively  in  the  banking  business  of  England  and 
the  United  States. 

In  Sept.  18G5,  Sir  John  Lubbock  reported  that  of  £19,000,000 
received  at  bis  bank,  the  cheques  and  bills  constituted  96.8  per  cent., 
bank,  notes  2.2  per  cent.,  country  notes  0.4  per  cent,  (all  notes  2.6 
per  cent.),  and  of  coin  0-6  per  cent.;  or  of  credit  money  99.4  per 
cent,  and  of  coin  only  six-tenths  of  one  per  cent.! ! 

In  1880  Mr.  John  B.  Martin  gives  a  table  of  the  receipts  of  all  the 
London  banks  at  99  per  cent,  of  bills,  cheques,  and  notes,  and  1  per 
cent,  of  coin. 

In  November,  1877,  the  late  President  Garfield,  then  a  member  of 
Congress,  requested  the  Comptroller  of  the  national  banking  system 
to  institute  an  inquiry  upon  this  subject,  which  resulted  in  the  fact 
that  in  six  days,  of  $157,000,000  received  over  the  counters  of  52 
national  banks,  only  12  per  cent,  was  in  cash,  and  88  per  cent,  in 
cheques,  drafts,  and  commercial  bills. 

In  this  investigation  the  Comptroller  of  the  Currency,  Mr.  Knox, 
has  taken  a  leading  position,  which  is  accorded  to  him  by  the  London 
Institute  of  Bankers.  He  has  pursued  this  subject  with  great  industry 
and  success  in  the  last  two  or  three  years. 

In  his  annual  official  report  of  December  5,  1881,  he  gives  the 
results  of  the  reports  made  to  him,  which  show  that,  on  September  17, 
1881,  the  total  receipts  of  all  the  National  Banks  were  in  cheques, 
drafts,  and  bills — an  average  of  94.1  per  cent,  of  the  total ;  those  of 
the  city  of  New  York  98.8  per  cent.,  while  those  of  banks  elsewhere 
than  in  the  principal  cities  amounted  to  81.7  per  cent. 

This  difference  of  proportions  between  the  receipts  in  places  where 
the  business  of  exchange  is  best  organized  and  those  less  well  arranged, 
shows  the  force  and  use  of  system  in  the  credit  business  of  the  country, 

(301) 


302 


POLITICAL   ECONOMY 


and  shows,  besides,  how  greatly  the  precious  metals  and  their  repre- 
sentative circulating  notes  are  eliminated  from  the  marts  of  general 
commerce. 

As  I  cannot  transcribe  the  report  of  the  Comptroller  in  all  its  in- 
structive details  (which  are  all  given  with  their  full  effect),  I  must 
refer  the  inquirer  to  his  Annual  Report  for  1881,  which,  I  am  allowed 
to  say,  will  be  forwarded  on  application  to  whomsoever  may  require  it. 

I  add  a  comparative  table  of  these  percentages,  compiled  by  Mr. 
Pownall,  and  read  before  the  London  Banker's  Institute  in  November, 
1^81  ;  to  which  Mr.  Knox  has  prefixed  the  report  of  the  National 
Banks  of  New  York  City  for  September  17,  1881. 


New  York 

London    .... 

Edinburgh 

Dublin     .... 

Country  banks  in  261  places 


Coin. 

Notes. 

Per  cent 

Per  cent. 

.55 

.65 

.73 

2.04 

.55 

12.67 

157 

8.53 

15  20 

11.94 

Cheques. 
Per  cent. 

98.80 
97.23 
86.78 
89.90 
72.86 


"It  will  be  seen  that  the  proportion  of  cheques  and  drafts  used  in 
London  does  not  vary  greatly  from  that  of  the  same  items  shown  in 
the  receipts  of  the  banks  in  New  York  City.  The  proportions  used 
in  the  banking  business  of  the  country  districts  is  less,  as  in  the  United 
States  it  is  less  in  the  banks  outside  the  cities;  but  the  use  of  cheques 
and  drafts  in  the  country  districts  in  the  United  States  is  nearly  nine 
per  cent,  greater  than  in  the  corresponding  districts  in  England." 

Mr.  Knox  gives  another  statement  derived  from  official  reports  of 
the  National  Hanks,  collected  under  his  orders,  showing  the  proportions 
of  their  receipts  on  the  17th  day  of  September,  1881,  thus: — 


Percentages  of  Total  Receipts. 


Gold  coin 

Silver  coin. 

Paper 
cuireucy. 

Cheques, 
drafts,  eic. 

New  York  City 
Other  reserve  cities  . 
Banks  elsewhere 

0.54 
1.86 

1.38 

0.01 

0.18 
0.68 

0.17 

0.65 

.Mil 
14.27 

98.80 
'.12. 35 
81.74 

United  States  . 

4.36 

9409 

APPENDIX  A.  303 

The  Bank  of  France,  with  its  90  branches,  has  the  entire  control  of 
the  note  circulation  of  the  Empire,  and  is,  therefore,  in  the  position  to 
report  the  proportions  of  its  own  different  kinds  of  circulation,  paid 
and  received ;  but  the  business  system  of  cheques  and  drafts,  and  other 
instruments  of  the  set-off  settlements,  so  largely  used  in  England  and 
the  United  States,  have  been  very  partially  introduced  in  France,  and 
its  bank  reports  do  not  afford  us  a  useful  comparison,  otherwise  than 
as  they  illustrate  the  effects  of  the  unlike  usages  of  the  different  sys- 
tems of  currency. 

For  the  data  of  this  really  important  statistical  question  in  the 
monetary  system,  I  cannot  too  emphatically  refer  the  studious  inquirer 
to  the  report  of  the  Comptroller  of  the  Currency  of  the  date  December 
5,  1881,  pp.  11-26. 

The  Journal  of  the  Institute  of  Bankers  (London)  of  December, 
1881,  estimating  the  service  of  Mr.  Knox  in  this  inquiry,  and  antici- 
pating his  promised  last  report,  says:  "There  can  be  little  doubt  that 
with  his  great  ability  and  grasp  of  details,  he  will  extract  from  them 
all  the  information  which  they  can  be  made  to  yield." 


INDEX  RAISONNE. 


Political  Economy,  what  it  is  and  is 

not,  9 
Authorities  in,  10 
A  system,  not  a  science,  11 
Remedial,  not  arbitrary,  11 
Empiricism,  Baconianism,  12 
Uses,  not  essences,  known,  12 
Study  of  the  ensemble,  13 
Rule  of  investigation,  13 
Subjects  and  objects   of  economic 

study,  14 
Deductive  and  inductive  methods, 

both  required,  14 
Heresies  of  the  authorities,  15 
Doctrine  of  despair,  15 
Mischiefs  of  theory  at  work,  16 
Man  and  his  conditions,  16 
Divine  order  of  society,  17 
Limits  of  the  inductive  system,  IS 
Wealth— Definition  of,  18 
The  light  ahead,  19 
Experience  as  a  guide,  20 
Substances  of  wealth,  20 
Wealth  and  capital,  20 
Labor  is  capital,  21 
All  utilities  are  riches,  21 
Property  is  worth  what  it  yields, 

22 
English  assessments,  22 
Wealth  is  well-being,  23 
Growth  of  Wealth — Labor  value  of  all 

commodities,  23 
Original  powers  of  the  soil,  24 
Value  of  natural  forces,  25 
Land,  a  machine,  25 
Vital  and  inanimate  machinery,  25 
Grammar,    the    mechanism   of   lan- 
guage, 26 
Occupation  of  the  Earth — Man  and  land  ; 

choice  of  location,  27 
Runt,  Ricardo's  theory  of.  27 
Choice  of  land  under  conditions,  28 
A  pioneer  chooses  his  match,  29 
The  richest  lands  rejected,  29 
Men    begin    always    with    inferior 

machines,  30 
Abandonment  of  the  best,  30 


Occupation  of  the  Earth — 

Cosmopolitanism  not  true,  30 
Distributive  law  of  settlement,  31 
Colonization,   ruled  by  isothermal 

lines,  32 
Invasions  and  migrations,  history 

of,  32 
The  law  and  the  facts,  33 
World-wide  sovereignties,  33 
England's  occupancy  of  India,  33 
Consequences  of  the  law,  34 
The  law  in  the  United  States,  Ham- 
ilton, 35 
Federal  Unions,  35 
The  husbandman  and  landlord,  36 
H  uman  sustenance,  provision  for, 36 
Famines  in  agricultural  countries, 

37 
Inter-dependence  of  industries,  37 
Demand  limited  as  the  supply  is,  38 
Narrowness  of  outlook,  38 
Imperfect  agriculture,  39 
Abundance  of  land  waiting  for  cul- 
tivation, 40 
The  available  in  reserve,  40 
English  agriculture.  40 
Effect  of  balanced  industries,  41 
French  agriculture,  42 
American  sufficiency,  42 
Sufficiency  a  relative  terra,  42 
Disorders   the  data   of  the  dismal 

science,  43 
The  law  of  nature,  43 
Fixed    property    the    measure    of 

wealth,  44 
Northern  and  Southern  States  com- 
pared, 45 
Land  monopoly  in   England  ;   divi- 
sion of,  in  France,  45 
The  French  peasant  a  husbandman, 

45 
Popular  loan  of  Louis  Napoleon,  40 
Agriculture  in  the  United  States,  46 
Virginia  farming,  47 
Nature  an  economist,  48 
Solidarity  of  a  true  economy,  48 
August  Couite,  method  of,  49 
(  305  ) 


306 


INDEX. 


Rent — Science    of    agriculture    in    ex- 
pectancy, 49 
Products  of  land  and  labor,  differ- 
ence of,  50 
Property  in  land  usurpation  !   50 
Argumentum  ad  absurdum.  51 
Fundamental  principles,  51 
Land    under  the    common    law  of 

property,  52 
Theory  of  value  solves  the  ques- 
tion, 52 
Cost  and  value,  53 
Progress,  with  a  better  time  coming, 

58 
Instances  of  amelioration  of  condi- 
tions, 54 
Specialties  in  inquiry,  55 
A  part  more  than  the  whole,  55 
Means  and  demands  of  human  life, 

56 
Consumption  is  reproduction,  56 
Tables  prefigure  facts,  57 
The  supernatural  in  the  mechanical 

powers,  57 
Delegated  omnipotence,  58 
Cause  and  effect.  58 
Matter  conjoined  with  spirit,  59 
Dynamic  force  of  coal,  59 
Auxiliary  force  and  velocity  of  ma- 
chinery, 60 
Machinery  the  bone  and  muscle  of 

science,  60 
Tyndall   and  llux'ey  verging  upon 

spiritualism,  61 
Munificence     and    benevolence     of 

mechanical  inventions.  61 
Brute  and  human  life,  differences, 

62 
Design  of  life  limits  its  duration.  62 
Entertainment  for  man  and  beast, 

63 
rectification  of  appearances,  63 
The  exotic  and  the  native  in  Brit- 
ish products,  64 
Foreign  trade,  true  system  of,  65 
Trade  relations,  natural  law  of,  65 
Foreign     trade     naturally    supple- 
mentary, 65 
Free  trade  a  misnomer,  66 
Domestic    commerce    is    more    than 

huckstering,  t;7 
Division   of  labor,  Smith's  doctrine 

of,  abused,  67 
Commerce  differs  from  trade,  68 
Statistic*    of   foreign    trade    unre- 
liable. 68 
British   and   American  reports  de- 
fective. 69 
Consumption  the  true  measure  of 
wealth,  69 


Rent — 

General  welfare  best  measure,  70 

Improvement  in  travel  and  trans- 
portation a  measure  of  wealth. 70 
Time    and    cost    of   transportation 

lessened,  70 
Facilities  of  commerce  in  growth 

of  wealth,  71 
Summary     of     wealth  -  producing 
agencies,  72 

Cheapness  and  plenty  supplanting 

dearness  and  scarcity,  72 
Vastly  enhanced  well-being,  73 

Contrast  of  savage  life,  73 

Famines  in  Judea,  74 

Vegetable   and    animal    food,    pro- 
portion of  nutriment  in.  75 

Substitution  in  clothing,  75 

Mineral  supplies,  progress  of,  75 

Beneficent  distribution  of  products, 
76 

Substitution,  successive  stages  of, 
76 

Tabular  lists  of,  77,  78 

Progress  from   inferior  to  superior 
of  the  same  kinds,  78 

Another  kingdom  in  the  domain  of 
the  physical  sciences,  79 

Knowledge  is  power,  79 
Population — Rate  of  increase,  80 

Various  among  Europeans.  SO 

Inconstant  rate  of  mortality,  81 

Inequality  of  survivals,  82 

The  inductive  system  incapable  of 
the  problem,  83 

The  grist  of  the  Gradgrind  system, 
i-3  ' 

A  priori  leads  to  a  posteriori,  83 

Mind  has  instincts  as  the  body 
has,  84 

Design  regulates  fertility,  85 

Law  ruling  in  order;  a  basis  of 
reasoning,  85 

The  rule  of  law  in  disorder,  85 

Production  of  life  lea-t  where  its 
activity  is  greatest.  86 

Unequal  activity  of  the  vital  func- 
tions. N7 

No  constant  quantity,  87 

Antagonism  of  the  nervous  and 
generative  functions,  88 

Law  of  balance  aud  counter-bal- 
ance. 89 

Indian  characteristics,  89 

Counterpoise  of  the  passions,  90 

Promise  of  harmony,  91 

The  law  works  best  where  most 
needed.  91 

Amendment  of  conditions  tends  to 
adjustment  of  provision  for  life, 
153 


INDEX. 


307 


Popvlatiox — 

Wnste  of  life  not  a  remeil.y  for,  but 

a  cause  of,  fecundity,  92 
Summary  of  the  argument,  93 

Symmetry    of    J.    B     Say's    cate- 
gories, 93 
Confusion  in  the  Say  school.  91 
Say's  triad  is  only  a  duad,  95 
His  distribution  is  nothing  but  ex- 
change of  values,  95 
Blanqui   and    Kicardo    on    natural 

rate  of  wages,  95 
The  protests  of  humanitarians,  90 
Insurrections  of  the  laborers.  97 
Capital  and  wages  born  of  civiliza- 
tion, 97 
Carey's  law  of  wages,  98 
Labor  and  capital  joint  faetors  in 

production.  99 
The  gain  of  the  purchasing  power 
of  wages  under  accumulation  of 
products,  99 
How  increased  wages  results  from 

increased  productiveness,  99 
Productiveness   of  the  human   ma- 
chine dependent  upon  its  condi- 
tion, 100 
Better    service    commands    better 

wages,  100 
General    law,    that   only  land    and 
labor  enhance  in  exchange  value, 
101 
All     improvements    in    production 
mean  and  intend   greater  cheap- 
ness, 102 
Labor-cost  in  eases  of  genius   and 

in  best  soils,  102 
The  enhancement  of  wages  found 
in   the  elevation  of  the  masses, 
103 
Progressive  improvement  slow  but 

sure,  104 
Historical    increase    of    wages    in 

England  and  Ameriea,  104 
In  France,  104 

Purchasing  power  of  wages  in  do- 
mestic service,  105 
Tabular  statement,  105 
Evidences  of  enhancement  in  wages, 

105 
Displacement  of  drudgery  by  art, 

106 
Song  of  the  Shirt  to  a  new  tune,  1 06 
New  wine  bursts  old  bottles,  106 
Prices  of  agricultural  products  not 
a  good  standard  of  wages  values, 
106 
Wages  and  expenses  in  Massachu 

setts,  107 
Our  census  reports  unreliable  in  the 
matter  of  wages,  108 


Population — 

Census    reports    of    wages    in    the 

three  last  decades,  table,  108 
Increase  of  machinery  does  not  ex- 
plain   decreased     percentage    of 
wages  to  products,  109 
Criticism  of  the  census  reports  by 

the  superintendent,  109 
Wages    and    profits  confounded  in 

the  census  tallies,  110 
Other  sources  of  error  and  uncer- 
tainty in  the  reports,  1 10 
English   method  of  estimating  the 

national  wealth,  1 11 
Various  estimates  by  English -ex- 
perts, 1 11 
Vices  of  the  income  tax  estimates 
and    of   values   of   domestic   ex- 
ports, 112 
Guess  at  the   rate   of  increase   in 
wenlth  of  Great   Britain  and  the 
United  States,  112 
Rise    of    the    masses    the    surest 
measure  of  growing  welfare.   11.1 
Conclusion  as  to  wages  in  the  United 

States,  1  13 
Tendency  to  equality  of  benefit  in 
the  ratio  of  growth  of  wealth,  1 14 
Wages  the  index  of  productiveness, 

114 
Illusions  of  averages  and  percent- 
ages in  statistical  inferences,  114 
Money — What  money  is,  115 

Various  mediums  of  exchange,  116 
Money  not  a  standard  of  values,  116 
Precious   metals   matters   of   mer- 
chandise, 1 1  7 
Legal  standard,  117 
Various  standards  of  money  value 

in  past  times,  1 17 
Changes  in  the  money  account  value 

of  a  pound  of  silver,  118 
Exchange  value  of  money  declines 

like  other  things.  1 18 
Reduced  burden  of  British  debt  in 

money  values,  1 18 
Production  of  the  precious  metals 

in  past  time,  1 19 
Production  and  consumption  in  the 
arts  in  recent  years,  120 
Functions  of  Money — Money  not  dead 
capital,  121 
Various  kinds  of  money  adapted  to 

various  uses,  121 
Precious  metals  command  their  use 

by  their  fitness,  122 
The  special  qualities  of  the  precious 

metals.  122 
Their  quality  of   convenience    the 
essence  of  the  mouey  service,  123 


308 


INDEX, 


Monet  and  Prices,  124 

The  money  in  use,  not  the  equiva- 
lent of  the  exchanges,  124 

Montesquieu,  Hume,  and  Mill  in 
error,  124 

Money  not  a  measure,  as  pounds, 
weights,  and  yardsticks  are,  125 

Hume  in  contradiction  to  himself, 
125 

Mill  likewise  and  unwise,  125 

Settlement  by  set  off,  126 

Proportion  of  money  to  amount  of 
business  exchanges.  126 

Influences  upon  prices,  127 
.  Immeasurable     effects    of    outside 
causes,  127 

Equivalence  of  money  has  no  re- 
lation to  the  facts  of  exchange, 
128 

Money  of  account,  the  standard, 
128 

Metaphysics  in  the  common  mind, 
129 

Relation  of  prices  to  supply  of  the 
precious  metals,  129 

Uncertainty  of  prices  in  the  cen- 
turies, 130 

Thomas  Tooke,  authority  of,  131 

Quantity  of  currency  not  a  regula- 
tor of  prices,  1 3 1 

Expansion  of  currency  an  effect, 
not  a  cause  of,  advanced  prices, 
132 

Increase  of  currency  with  decrease 
of  price,  132 

Prices  rose  and  fell  under  influx  of 
coin,  133 

Facts  against  logical  abstractions, 
133 

Montesquieu's     demonstration      of 
equivalence  of  money  and  price, 
133 
Standards — gald  and  silver,  or  both,  134 

Mono-  and  bi-metaltism  in  currency, 
134 

Conventional  value,  an  ideal  stand- 
ard,  135 

Variance  in  valueof  gold  and  silver, 
historical,  135 

Increase  of  gold  has  not  inflated 
prices  in  fifty  years,  136 

Legal  tender,  an  arbitrary  deter- 
mination of  value,  137 

Effect  of  quantity  of  the  precious 
metals,  137 

England's  preference  of  gold  as  the 
unit,  reasons  for,  138 

Merchants,  a  universal  common- 
wealth, 138 

Compromise  of  the  Latin  nations, 
138 


Standards — 

Commerce  in  the  precious  metals, 
139 

Cosmopolitanism,  its  limitations, 
139 

The  precious  metals,  a  national  in- 
terest and  concern,  140 

Relative  circulation  of  metallic  and 
paper  motiey  in  United  States 
and  in  France,  140 

Non-exportable  currency,  141 

Patriotic  service  of  the  non-export- 
ahle  during  the  suspension  of 
specie  payments,  141 

Debasement  of  lawful  coin  not 
fraudulent,  instances,  142 

Convenience  of  coinage,  143 

Depreciation,  in  France  and  Turkey 
and  in  the  United  States,  143 

Surplus  of  gold  and  silver,  com- 
modities of  trade,  144 

Money  only  an  instrument  of  ex- 
change, not  of  its  substance  and 
its  substance  indifferent,  148 

Substances  of  money  (repetition), 
145 

Not  equivalents,  145 

National  money  and  balance  of 
trade,  145 

Office  and  service  of  specie  reserve, 
146 
Money — a  producer  of  values,  146 

Labor,  "the  creator  of  wealth," 
rectified,  146 

Compass  of  the  term,  146 

Capital  in  production,  a  co-efficient, 
147 

The  partners  in  production,  147 

Capital,  147 

Savages,  147 

Capital  the  primum  mobile,  148 
Interest — the  earning  of  money,  148 

All  are  hirelings  who  serve,  149 
Money  of  Account,  149 

Ideal  money,  the  macutes  of  the 
Africans.  150 

Bishop  Berkeley,  money  of  account, 
150 

Act  of  Congress,  Hamilton,  Jeffer- 
son, 150 

Colwell  on  money  of  account,  150 

What  it  is,  150 

Marquis  Gamier,  detail  of  money 
of  account,  150 

Kelly,  author  of  "  Universal  Cam- 
bist," standard  of  the  precious 
metals,  151 

Units  of  value  without  correspond- 
ing coins  in  England  and  America, 
151 


INDEX. 


309 


Money  of  Account — 

Precision  in  the  weight  of  the  sov- 
ereign, 152 

Anecdote  of  the  poultice,  152 
Credit  Money,  153 

Money  medium,  its  convenience 
and  effectiveness  ;  its  essentials, 
153 

Discussion  of  the  derivation  of  the 
word,  useless,  153 

Money  and  the  mechanical  powers, 
difference  of  qualities  of,  154 

Cost  of  the  fractional  note  currency, 
154 

Unit  of  value,  in  different  countries, 
155 

Measures  of  space  idenl,  as  well  as 
measures  of  value,  155 

Standard  of  value,  disturbance  of, 
troublesome,  15t3 

Denominations  of  circulating  notes, 
governed  by  convenience,  156 

Relative  numbers  of  the  denomina- 
tions outstanding,  156 

Proportion  of  coin  to  paper  notes 
in  circulation,  157 

Notes,  deposits,  and  coin  aggre- 
gated, 157 

Ratio  of  coins  and  paper  money  in 
circulation,  157 

Total  requirement  of  money,  guess- 
ed at,  158 

Equivalence  of  money  to  exchanges, 
158 

Money  values  exchanged  as  often 
as  those  of  commodities,  158 

Set-off,  the  idea  of  money  not  in 
its  substance  but  in  its  service, 
159 

Influx  of  the  precious  metals,  how 
disposed  of,  159 
%  Relative  circulation  of  silver  and 

gold,  160 

Money  eliminated  by  improved  or- 
der in  business,  160 

Banks  and  bankers  are  clearing- 
houses, 160 

Supply  and  demand  does  not  ex- 
plain prices,  160 

Increase  of  geld  and  silver,  with  in- 
crease of  paper  money  besides, 
has  not  enhanced  prices,  161 

Nor  will  any  enhancement  of  their 
product  depress  prices,  161 

The  precious  metals  and  paper  cur- 
rency, vicarious,  mutually,  161 

Stability  of  value  as  between  debtor 

and  creditor  to  be  secured,  162 
Steadiness      and     gradualness     in 
changes.     Relative  rise  of  land 
and  labor,  162 


Banking,  163 

Two  kinds  of  banks.     The  earliest 
bank  of  discount  and  deposit,  163 
Banks  of  discount  and  deposit,  164 
The  service  of  the  banker,  164. 
Simple  barter — its  losses,  165 
Amount  of  deposits  in  banks,  166 
Savings  banks  and  accommodation 

loans,  166 
Bank  advances,  an  anticipation  of 

property  returns,  166 
•Goldsmiths,  the  bankers  of  London 

in  A.  D    1661,  167 
Amount  of  deposits.     The   comp- 
troller's data,  167 
Vast  deposits  not  officially  reported, 

168 
Money    otherwise   idle,   moves    all 
our    manufacturing    enterprises, 
168 
Smith  and  Mill,  errors  in  the  func- 
tion of  money,  169 
Analogy    and    differences    between 
circulation  of   the    blood  and  of 
money,  169 
Panics  and  pressure  their  causes, 

170 
Credit  money  a  better  correspond- 
ent to  exchanges  than  coins,  171 
Banks  of  Issue,  171 

Early  banks  and  brokers,  171 
Earliest    bank   of   issue    in    A.   D. 
1658.     None  in  effect  before  18th 
century,  172 
Bank    of    England    notes    of    very 
limited  circulation  in   17th  cen- 
tury, 172 
The  advances  of  civilization  in  the 
generation  preceding    the    bank 
note,  172 
Inventions  arise  out  of  conditions, 

172 
Bills  of  exchange — the  Jews,  172 
Bills  of  exchange  different  from  the 

circulating  note,  173 
The    banks  of   Venice,   Barcelona, 
Genoa,  earlier  than  that  of  Swe- 
den, 173 
Those  were  mainly  fiscal  agents  of 

their  governments,  174 
Constitution  of  Bank  of  Venice,  174 
Depreciation  of  coins,  174 
Premium  upon  bank  credits,  174 
Standard  of  value,  175 
The  standard,  a  money  of  account, 

175 
In  our  clearing  houses  the  medium 

is  nearly  all  credit,  175 
Indirect  barter,  175 
Barter     relieved     of     a     medium 
through  set-off,  176 


310 


INDEX. 


Banks  of  Issuf — 

Basis  of  the  premiums  in  Bank  of 

Venice  credits,  176 
Depreciation  of  coins,  176 
In  England  in  the  17th  century,  176 
Debased  coin  the  cause  of  bank  es- 
tablishments, 177 
Bank   of  Venice   founded    upon   a 

forced  loan,  177 
Our  first  national  bank  based  upon 

the  nation's  debt,  177 
Washington   arid    Hamilton   on   the 

basis  of  a  national  bank,  178 
Adam  Smith's  wagon-way  through 
tbe  air  successfully  realized,  178 
Adam    Smith    would    have    paper 
only  a  representative  of  metallic 
money,  179 
Authority  upon  opinion.  179 
The  Bank  of  Genoa.  179 
"  Pay  as  you  go,"  179 
Its  cautious  policy,  180 
Charter  exemptions,  180 
Care  of  government  over  the  circu- 
lation, 180 
Remissness  of  the  Federal  Govern- 
ment  in    relation    to    our    paper 
currency,  181 
The  national    banking    system  has 
reclaimed  and  exercises  the  right, 
181 
The  Bank  of  Genoa  did  not  furnish 

a  circulating  note,  181 
Inconvenience  of  our  silver  dollars, 

182 
The  precious   metals,  an  indorser 

of  the  note,  182 
The  Bank  of  Genoa   extended   its 

accommodations.  182 
A  clearing  house,  182 
The  circulating  note  a  deliverance 

from  the  coin  nuisance,  182 
Large    privileges    conferred    upon 

the  bank,  182 
Inherent  ills  of  coined   money.  183 
Gold  and  paper  during  suspension, 

183 
Contributors  to  the  capital  of  the 
Bank  of  Venice  like  the  British 
consols,  183 
The  consols  described.  184 
National  loans  sold  at  discount,  1  $4 
English  and  American,  184 
The  policy  of  such  sales  at  a  dis- 
count, 185 
Repudiation  of  national  debts,  18") 
Bank  of  Amsterdam,  186 
Holland's  maritime  commerce,  186 
Cromwell   and   Colhert   followed  by 
Louis  XVI.  and  Charles  II.,  187 


Banks  of  Issdf. — 

Faith  in   the  existence  of  the  sub- 
stance serves  as  well  as  the  facts, 
187 
The  bank  sound  in  business  though 
without  capital   for   fifty  years, 
188 
Causes  of  its  failure — (he  principal, 
that   it  did   not    make   its    loans 
transferable.  189 
Government  debts.  189 
Traffic  in  national  debts,  the  origi- 
nal subscribers  not  lenders,  190 
Government  protected  the  currency 

which  it  authorized,  190 
The  notes  kept  nearly  at  par  by  an 

interconvertible  process,  190 
Flexibility  of  the  currency,  191 
Dr   Hush's  theory  of  the  spleen,  191 
Usury,  interest — money  of  account 
the  only  true  measure,  191 
Bank  of  IlAMBr  rg,  192 

The  new  unit   of  value,  the  marco 

banco,  premium  upon,  192 
What  is  to  be  done  tor  a  standard  ? 

192 
Spanish  milled  dollars  in  reserved 

rent,  193 
Instability  of  coin  values.  193 
Banks  without  issue,  useful  in  large 

cities,  194 
Their  certificates  of  deposit  not  as 
serviceable  as  circulating  notes, 
194 
The    modern    system    of    banking 
traced,  194 
Bank  of  England,  194 

Depreciation  of  the  coins,  194 
Agitation  of  the  currency  question, 

194 
Mr.  Col  well's  "  Ways  and  Means  of 

Payment"     Carey,  195 
General   commendation  of  Colwell 

and  Carey,  195 
English  efforts  to  remedy  the  coin- 
age nuisance  until  Elizabeth,  195 
Simple  deposit  banks  not  answer- 
ing, 196 
Improvements   must   be  forced  by 

felt  necessities,  196 
Speculations  of  every  sort,  196 
Inspired  projectors,  197 
The  advantage  of  the  after  thought, 

197 
Genius  and  experience,  197 
The  bank  charter  of  England  smng- 

gleu  into  etlect  in  disguise',  198 
The  whole   capital   converted    into 

national  debt,  198 
The  credit  character  of  the  bank's 
securities,  not  its  mischief's,  198 


INDEX. 


311 


Bank  of  England — 

Substance  of  its  capital.  108 
The  only  joint  stock  bank  for  Lon- 
don from  1604  to  1884,  198 
Condition  of  the  bank  in  1877,  199 
Safe  amount  of  reserve,  199 
Wild  changes  of  bank  rates  of  in- 
terest, 199 
Causes  of  fluctuating  rates,  199 
Money   market   and    food    market, 

199 
Eminent  uses  liable  to  great  abuses, 

201 
Connection  between   Bank  of  Eng- 
land reserves  and  rates  of  inter- 
est, 201 
Banking   and  issue  departments — 

the  charter,  202 
Liabilities,  202 
Suspensions  of  the  bank,  203 
A  pinch  or  nip  explained,  203 
Cautionary  signals  frequent,  204 
Business  disasters  resulting,  205 
The  Directors  implicated  in  produc- 
ing oppressive  rates,  205 
Profits  under  high  rates,  205 
Absurdity  of  the  restriction  in  the 

charter,  206 
A   bank  director's  justification   of 

plunder,  20b' 
Instant  convertibility  the    aim    at 
whatever  resulting  mischief,  207 
Other  banks  in  the  United  Kingdom, 

208 
Banks  of  Scotland,  208 
Varied  American  experience,  208 
Failures  of  systems,  208 
Failures  of  English  and  American 

banks  compared,  209 
Bank  of  the  United  States— failure, 

209 
Suspensions   of   Bank  of  Eugland, 

209 
Different    conditions    of    the    two 

banks,  210 
Recuperative  power  in  human  na- 
ture and  business,  211 
Discount  upon  our  State  bank  cur- 
rency, 211 
Dusiness  disasters,  212 
Mr.  Chase's  conditions  of  a  sound 
paper  currency,  212 
Our   National    Banking    System — its 
securities  like  those   of  Bank  of 
England,  212 
Difference    between    the    systems, 

213 
Redemption  by  the  Treasury,  and 
adjustment  of  the  security  to  the 
issues,  213 


Character  and  Qualities  of  National 
Uank  Notes.  213 
Protection  of  depo.-itors,  213 
Danger  from  depositors,  214 
The  Government  not  a  party  in  the 

banking  business,  214 
Intervention  of  Comptroller  for  ben- 
efit of  creditors,  215 
Double    liability    of    shareholders, 

215 
Unlimited     liability,     inequitable, 

215 
Impolicy  of  unlimited  liahility,  215 
"Limited  liability"  in  joint  stock 

corporations,  216 
Danger  from  deposits  proportioned 
to  their  comparative  amount  to 
the  notes,  216 
"  Deposits"  for  the  most  part  debts 

of  the  depositors,  216  , 

Depositors  first  in  a  run  upon  banks, 

217 
Notorious  danger  of  the  old  State 

bank  system,  218 
Bad  bauking,  revulsions  in  business, 

218 
The  attendant  risks  of  credit,  219 
Adam  Smith's  limitation  of  paper 
money  to  the  sum  of  its  metallic 
base,  219 
Credit  money  represents  the  values 

in  exchange,  220 
Popular  opiuion  accords  with  Smith, 

220 
The  failure  of  this  doctrine  in  the 
case  of  the  Bank  of  England,  220 
Restricting   issue  in    the   first  Na- 
tional Bank  Act,  repealed,  220 
National   bank,  adaptation  of  sup- 
ply to  demand,  221 
Bank  of  France  totally  abandoned 
the    equivalent    reserve    policy, 
221 
Bonnet's  conversion  in  faith,  222 
A    circuhitiou    without    a   metallic 

hase,  222 
Smith's  wagon-way,  222 
Bonnet  on  irredeemable  currency, 

222 
Discounting  the  future,  all  enter- 
prise looks  to  its  future,  223 
Time-honored   experience   inveter- 
ate, 223 
England  in  1866  followed  the  ex- 
ample   of    France,    maugre    her 
orthodoxy,  223 
Obstinate  adherence  to  precedents, 

224 
The  guidance  of  precedents,  224 


812 


INDEX. 


National  Bank  Notes — 

History  of  the  Bank  of  France  un- 
der its  great  trial,  224 

Strength  of  a  bank  measured  by  its 
cash  reserve,  225 

Government  control  of  the  Bank  of 
France,  225 

Silver  in  France — mitigation  of 
forced  legal  tender  in  the  United 
States  and  in  France,  226 

Desolation  of  France  in  1870  de- 
scribed, 226 

Steadiness  of  French  financial  man- 
agement. 227 

The  bank's  advances,  227 

The  bank  under  full  sail  in  the 
tempest,  227 

Vast  increase  of  its  circulation, 
diminution  of  reserve  and  its  re- 
covery, 227 

The  unfavorable  balance  of  trade 
damaged  the  credit  of  the  circu- 
lation, 228 

The  bank  paid  and  received  specie 
freely  during  its  legal  exemption, 
228 

Dividends  and  price  of  shares  in 
1876,  227 

Financial  prosperity  of  the  French 
Government,  227 

Macaulay  on  the  national  debt  and 
resources  of  England,  228 

Protection  of  national  industries, 
228 

The  national  money  sufficient  when 
protected  from  "the  money  of 
the  world,"  229 

A  well  guarded  foreign  trade  re- 
lieves from  the  necessity  of  specie 
reserves,  229 

Favorable  balance  of  trade  keeps 
banks  safe  without  the  basis  of 
coin,  230 

Theory  and  art  distinctly  one,  230 
The  Circulating  Note  is  the  money  of 
the  public,  its  qualities,  230 

The  service  of  the  bank  note  in  our 
Rebellion  estimated,  231 

Depreciation  and  recovery  of  our 
note  circulation,  231 

Unity  of  government.  A  multitudi- 
nous national  bank,  232 

Difference  between  coin  and  paper, 
and  likeness,  232 

The  Treasury  cannot  be  a  money 
dealer  as  a  bank  of  issue  is,  232 

Greenbacks  and  national  bank 
notes,  likeness  and  unlikeuess, 
232 


The  Circulating  Note — 

Fiscal  agency  banks,  difference  of 
our  national  banks,  232 

The  greenback  policy  would  not 
dispense  with  local  banks,  232 

Dangers  of  the  substitution  of 
heterogeneous  banks,  233 

Discussion  of  the  Greenbackers' 
plan  declined  for  lack  of  infor- 
mation, 233 

The  use  of  the  banking  system  is 
in  its  convenience,  233 

Collocation  of  bank  offices,  234 

Supervision  of  the  banks,  234 

The  freest  and  best  ever  devised  in 
respect  to  distribution,  231 

Excellence  of  the  Scotch  system  of 
banking.  234 

Scotch  banks  allow  interest  on  de- 
posits, land,  or  bonded  securities; 
advantages  of  this  policy,  which 
would  break  other  banks;  they 
are  effectively  credit  agencies, 
234 

Small  notes,  no  fear  of  driving  out 
specie,  234 

Mutual  care  of  each  other  by  the 
people  and  the  banks,  234 

Distribution  and  collocation  of  the 
Scotch  banks,  234 

Distribution  in  our  Northern  States, 
234 

Proportion  of  circulation  to  popu- 
lation in  Scotland  and  in  Eng- 
land, 235 

Col  well  on  Scotch  banking  system, 
235 

Limitation  of  paper  money  to  that 
of  specie  absurd,  235 

Provision  of  money  not  calculable, 
236 

National  banking  system  adjusts 
the  provision  to  the  need,  236 

In  different  localities,  the  require- 
ment varies,  23(3 

California  and  Virginia  in  this  re- 
spect, 236 

Money  eliminated  by  clearing 
houses,  236 

England  an  example,  236 

Elasticity  of  the  circulation  re- 
quired, 236 

A  spiral  spring,  2:17 

The  national  banks'  adjustment  to 
requirement,  237 

The  national  banks  do  not  draw  a 
double  interest  upon  their  de- 
posited bonds  by  the  use  of  the 
notes  issued  upou  them,  237 


INDEX. 


313 


The  Circulating  Note — 

Abatements  of  customary  rates  of 

interest,  238 
Losses  and  expenses  of  the  hanks 
pro  rata  chargeable  to  the  notes, 
230 
Premium  upon,  and  declining  value 

of  the  bonds,  239 
Circulation    of    country    and    city 

banks  contrasted,  '240 
Banks  that  refuse  the  notes,  240 
Notes  in  inverse  ratio  to  business 

of  the  banks,  240 
Measure  of   wealth   by  proportion 

of  fixed  to  floating  capital,  241 
Organization  of  business  and  elimi- 
nated money  circulation,  241 
Explanation  of  exceptions,  241 
General  conclusions,  241 
Two  and  two  do  not  always  make 

four.  242 
Caution  in  logic,  242 
International  Trade,  242 
Its  glorification,  242 
The  history  of  international  trade 
between  civilized  and  savage  na- 
tions, 242 
George  Thompson  on  the  devasta- 
tion of  India,  24:1 
Explanation  of  the  mischief,  244 
Character  of  trade  until  the  begin 
ning  of  the  present  century,  244 
The  rule  of  international  commerce, 

245 
True  free  trade  is  compulsory,  245 
True  commerce  grounded  upon  dif- 
ferences between  the  parties,  245  | 
Commerce  and  trade,  the  difference,  j 

245 
True  commerce,  245 
Commerce  of  diverse  climates,  and 

of  topographic  differences,  246 
Commercial  exchanges,  supplement- 
ary, 246 
Substitutes    for    foreign   products, 

246 
Free  trade,  resisting  manufactures, 
commits     itself     for     industrial 
home  drudgery,  247 
Manufactures  and  progress,  247 
Protection   relieves   non-competing 
foreign  products  from  taxation, 
247 
Tariff  for  revenue  only,  inflicts  ex- 
cises upon  home  products,  247 
Tariff  for  revenue  is  taxation  in  in- 
tention and  operation,  247 
Countervailing    duties,    Clay     and 

Webster,  247 
Infant  manufactures,  248 
21 


International  Trade — 

Clay    and    Webster   were   compro- 
misers. 248 
The  tariff  charged  with  class  legis- 
lation, 248 
Instances  of  class  legislation,  patent 

laws,  etc.,  248 
Vagueness  of  the  charge,  248 
Lending  money  not  a  monopoly  to 

the  borrower,  249 
Bonuses.     Colbert,    European    bo- 
nuses, 249 
Subsidies  and  gifts  of  public  lands, 

250 
Justified  by  their  diffusive  benefits, 

250 
Not  exactly  protective,  250 
Distributed    benefit    to    the    whole 
community  takes  a  favor  out  of 
class  legislation,  250 
Protection  is  not  taxation,  251 
Import  duties  not  taxes,  251 
Difference  in  four  points — ad  valo- 
rems    alien    to   the   principles  of 
protection.  251 
Not  in  essence  revenue  measures, 

251 
Blackstone's  definition  of  taxes,  252 
Protection  by  Noah  Webster,  252 
Duties  have  yielded  usually  nine- 
tenths  of  the  revenue,  252 
Similar  effects  from  various  agents, 


The    Zolverein    purely    protective, 
its  rule  and  rates  of  charges,  252 
Specific  duties.  253 
Polcy  of  the  Zolverein  not  for  re- 
venue, 253 
Adaptation  of  the  Zolverein  to  pro- 
oressive  improvement  in  produc- 
tion, 253 
Triumphant  results.     The  like  his- 
tory of  every  advancing  nation, 
253 
Rule  of  taxation  by  assessed  values, 

254 
Protection  draws  no  insidious  line 
between    luxuries    and    necessa- 
ries, 254 
"  Tariff'  for  revenue"  guilty  in  this 

respect,  254 
Protection  minds  its  own  business, 

254 
Its  free  goods.  254 
Foreign  wools,  255 
Domestic  wool  interests,  255 
Economic   wisdom    as    effective    in 
national    growth   as    its    written 
constitution,  256 
Fate  of  the  nations  ruled  by  their 
care  of  their  industries,  256 


314 


INDEX. 


Protection — 

Modes  of  defence,  change  with  the 
change  of  conditions,  256 

England's  change  of  method  in 
change  of  relations,  256 

Interference  with  private  freedom 
of  avocations,  257 

Class  legislation,  inequality  of  tax- 
ation, and  interference  with  per- 
sonal liberty.  Free  trade  ab- 
stractions, 257 

Fallacy  of  every  man's  competency 
to  choose  his  lot  in  life,  257 

Impertinence  in  the  question,  257 

Protection  secures  the  opportunities 
of  choice  in  business,  257 

Free  domestic  commerce  and  free 
foreign  trade,  258 

"The  world  governed  too  much," 
258 

Instances  of  necessary  government 
interference,  258 

Exceptions  to  rules.  The"  dodges  of 
untruths,  258 

Distribution  of  benefits  granted  to 
first-hand  beneficiaries,  258 

Laws  granting  special  privileges, 
259 

"  The  greatest  good  to  the  greatest 
number,"  a  justification  of  the 
oppression  of  minorities,  259 

The  hermaphrodite  philosophy  of 
democracy,  259 

Free  trade,  259 

The  most  advanced  minds,  the  most 
protruded  only,  259 

Opprobrious  epithets,  the  ammuni- 
tion of  free  traders,  260 

Instances  of  their  use  by  responsi- 
ble authorities  of  the  free  trade 
party,  260 

Implied  reproaches  to  Washington, 
Jefferson, Madison, and  Hamilton, 
260 

"That  government  is  best  which 
governs  least,"  261 

Double  aspect  of  civil  government, 
control  and  providence,  261 

"  The  devil's  own  government," 
261 

The  true  creed  of  democracy,  261 

Always  for  prohibition,  261 

The  requirements  as  well  as  the 
restraints  of  government,  262 

Diversities  of  avocations  required, 
262 

Census  report  of  great  diversity  and 
Dumber  of  pursuits.  262 

Provision  for  employment  of  wo- 
men, 262 


Protection — 

Household  industries  supplanted  by 
modern  machinery  in  factories, 
263 

Hamilton's  report  of  household 
manufactures  in  A.  D.  1791,  263 

The  courtesy  of  chivalry  enslaves 
and  debases  women,  263 

Wages  of  women  in  factories  in 
1850,  1860,  and  1870,  264 

Women's  adaptation  to  the  modern 
industries  indicated,  264 

Kinds  of  labor  in  which  they  are 
employed  in  factories,  264 

Protection  of  their  industries  de- 
manded, 264 

Idleness  of  women,  their  perdition, 
264 

Formal  enfranchisement  only  avail- 
able with  freedom  of  iudustry, 
264 

Freedom  to  all  capabilities  in  choice 
of  occupation,  265 

Cosmopolitanism    not    within    the 
province  of  national  governments, 
255 
Laissez  /aire  devolves  self  government 
upon  its  enemies,  265 

Felf-govcrnment!  265 

Proteciion  is  patriotic,  communism 
of  nations  is  not,  266 

Incapacity  of  cosmopolitanism,  266 

National  relations  to  it,  266 

Absurd  and  impracticable  levelness 
of  inherent  diversities,  266 
Laissez /aire  sustains  all  the  rules  of  in- 
equality, 267 

No  outside  rows  to  his  corn-field, 
267 

General  Jackson  a  protectionist, 
his  letter  to  Dr.  Coleman,  267 

His  doctrine  of  the  diversity  of 
industries,  268 

Fluctuations  of  the  foreign  wheat 
market,  268 

British  free  trade  has  made  English- 
men dependent  upon  foreign  sup- 
plies, 268 

Effects  of  broken  balance  of  indus- 
tries upon  England,  268 

Future  dependence  a  result.  Our 
rivals  in  the  food  market  of  Eng- 
land, 268 

General  Grant  concurs  with  Gen- 
eral Jackson,  269 

Home  Market,  269 

Division  and  proportion  of  the  in- 
dustrial  nations,  subsisting,  269 

Proportion  of  producers  of  raw  ma- 
terials to  manufacturers  in  Eng- 
land, 269 


INDEX. 


315 


Protection — 

England  dependent  upon  foreign 
markets  for  their  manufactures, 
269 

England's  industries  on  a  see-saw, 
a  metropolis  of  trade,  270 

Her  morning  drum-beat,  a  host  of 
huckster  drummers,  270 

Her  circular  hunt,  270 

Every  man's  place  kept  open  for 
him,  270 

Abundant    provision    and    thence 
equitable  distribution,  271 
Histoey  of  Protection  in  England  and 
the  United  States,  271 

Not  indifferent  to  practical  results 
of  theory,  272 

Truths  are  dynamics,  272 

British  protection  for  more  than  five 
centuries,  272 

Duties  upon  foreign  bar-iron,  272 

Repeal,  272 

Rates  of  duty,  272 

British  protection  not  yet  aban- 
doned, 273 

Protection  in  the  United  States,  273 

Its  stages,  273 

Panics,  bankruptcy,  from  1834  to 
1842,  274 

Failure  of  national  credit,  274 

Van  Buren  groaned  out  of  office, 
Washington's  oracle,  275 

Tariff  of  1860,  275 

Infant  manufactures!   273 

History  of  the  baby,  275 

Protection  as  a  sick-nurse,  276 

Protection  in  the  last  twenty  years 
triumphant,  276 

Import  duties  not  taxes  but  answer 
the  end,  while  "revenue"  tariffs 
fail  of  their  end,  276 

Hostile  interests  account  for  its 
instability,  276 

Southern  hostility  and  foreign  in- 
trigue, 27<) 

Bouncing  Jack,  277 

The  British  boast  of  perfectly  free 
trade,  statistical  abstract,  277 

British    excises    collected    at    the 
custom-house  not  protective,  277 
British   Countervailing  duties  are  in  all 
respects  protective.  278 

Fifty  millions  per  annum  of*  coun- 
tervailing duties,  278 

Free  trade  impracticable,  279 

Meaning  of  the  word  countervail, 
279 

Protective  duties  are  simply  coun- 
tervailing, 279 


History  of  Protection — 

Protective  agitation  revived  in  Eng- 
land—The London  Times,  280 

Free  trade  has  overdone  itself,  280 

Relaxation  of  restrictive  policy  by 
France  in  1860,  280 

France  retained  25  to  30  per  cent, 
of  protection  in  that  treaty,  280 

The  United  States  require  larger 
rates  of  duties  than  France,  281 

The  French  reservations  in  that 
duty  a  model  of  protection,  281 

Rates  of  French  duty  upon  certain 
articles,  281 

The  treaty  truly  indicates  the  in- 
dustrial capabilities  of  France, 
281 

Reflected  effect  of  duties  upon  do- 
mestic prices,  282 

The  duty  on  pig-lead  in  1845,  and 
price  after  reduction  of  duty.  282 

Interest  of  importers  in  reduction 
of  duties,  282 

The  producer  pays  the  duty,  282 

The  reduction  due  to  native  pro- 
duction, 283 

Protection  holds  foreign  imports 
down  to  a  fixed  maximum,  283 

Why  is  England  so  industrious  in 
pushing  her  free-trade  theories 
upon  us  if  she  does  not  bear  the 
duties  imposed  upon  her  exports, 
284 

When  the  foreigner  has  the  monop- 
oly the  consumer  pays  the  duty, 
284 

Home  competition  throws  the  duty 
on  the  importer,  284 

Drawhacks  in  evidence  that  the 
producer  pays  the  duty,  284 

Countervailing  duties  have  the 
same  meaning,  285 

Absolute  prohibition  so  much  more 
of  the  same  thing,  285 

Losses  by  protection  are  in  values 
exclusively,  285 

The  loss  in  values  essentially  com- 
pensated, 285 

Present  compensation,  285 

Other  effects,  285 

Growth  of  individual,  promotes  re- 
lative life,  285 

Nationalism  auxiliary  to  cosmo- 
politanism, 286 

Protection  regards  the  practical, 
286 

Expediency  the  rule,  286 

Protection  the  route  towards  free 
trade,  286 


316 


INDEX, 


History  of  Protection — 

Duties  reflected  upon  domestic 
prices,  286 

David  A.  Wells's  argument  on 
pig  iron  and  salt ;  his  estimated 
reduction  of  price  on  four  arti- 
cles §48,700,000,  2*7 

Amount  of  duty  upon  competing 
foreign  products  and  rate,  287 

Product  of  American  manufactures 
for  the  year  1859  and  for  1867— 
68,  287    . 

The  argumentum  ad  hominem  ab- 
surdity, 288 

The  economic  consequence,  tax  only 
non-compeling  imports,  288 

Anti-cosmopolitan  in  operation.  288 

Ad  valorems  alien  to  the  principle  of 
protection.  289 

Their  bad  qualities  and  effects.  289 

Taxation  as  a  policy  or  expediency, 
289 

Ability  and  availability  the  cus- 
tomary rule,  290 

Taxation  upon  consumption  im- 
practicable. Inequality  of  bur- 
den, 290 

Inhumanity  of  taxation  upon  con- 
sumption, 290 

Protection  kindly  discriminates,  290 

Taxation  on  consumption  ruthless, 
290 

Tariffs  for  revenue  only  and  for 
revenue  with  incidental  protec- 
tion badly  mixed  in  principle,  290 

Always  failed  even  for  revenue,  290 

A  tariff  for  revenue  is  a  tax,  for 
protection,  otherwise,  291 

Tariffs  for  protection  marked  by 
great  increase  of  foreign  con- 
sumption, 29  I 

Prices  have  no  arbitrary  effect,  291 

Cost  relative  to  means  of  purchase, 
291 

Lincoln's  truism  concerning  prices 
and  payments,  292 

Apothegms  not  explanations,  292 

Protection  prevents  monopolies,  293 

General  advantages  of  protective 
duties,  292 

Only  annuitants  and  idlers  injured 
by  protection,  292 

Statistics  prove  that  protection  is 
favorable  to  foreign  trade,  292 


History  of  Protf.ction — 

Buying  and  selling  both  greatly  in- 
creased under  protection,  293 

"If  you  do  not  buy  you  cannot 
sell''  fails,  29;; 

Exemption  of  all  non-competing 
imports,  293 

Modified  meaning  of  free  trade,  293 

The  essence  of  government  fully 
stated,  294 

Free  trade  not  practicable  in  any 
conditions,  294 

The  ordinary  free  trade  doctrine  is 
only  free  foreign  trade,  294 

Foreign  trade  must  he  under  the 
law  of  demand  and  supply,  29-3 

Values  of  imported  to  home  pro- 
ductions are  not  more  than  as 
one  in  a  hundred,  295 

The  free-trade  school  manufactured 
a  science  to  escape  the  practical 
truth,  295 

Gladstone  did  not  estimate  the  wel- 
fare in  his  estimate  of  the  wealth 
of  England.  296 

Gladstone's  troubles  as  Prime 
.Minister,  296 

The  practicability  of  protection  in 
a  popular  government.  296 

The  ad  hominem  argument  with  the 
Democrats.  297 

Protection  has  the  present  for  de- 
monstration and  couviction,  297 

The  prospective  is  the  inspiration 
and  impulse  of  all  enterprise,  297 

Its  instant  operation  by  anticipa- 
tion, 2'.*7 

Only  Democrats  doubt  democracy, 
297 

The  late  presidential  election  indi- 
cates the  capacity  of  the  people 
to  understand  a  policy  by  its 
results,  298 

The  felt  incompetency  of  Parlia- 
ment to  arrange  the  details  of  a 
tariff,  298 

The  English  horror  of  ad  valorems, 
298 
Appendix,  301 

Proportion  of  credit  money  to  cash 
in  banking,  391 

Interest  felt  in  the  inquiry  in  Eng- 
•land  and  America,  303 


>   OV  THE         ^ 


raw 


ivbrsi 


OF 

practical  and  Scientific  Boolp 

PUBLISHED  BY 

Henry  Carey  Baird  &  Co, 


INDUSTRIAL  PUBLISHERS,  BOOKSELLERS  AND  IMPORTERS, 

810  Walnut  Street,  Philadelphia. 


«3=  Any  of  the  Books  comprised  in  this  Catalogue  will  he  sent  by  mail,  free  of 
postage,  to  any  address  in  the  world,  at  the  publication  prices. 

*&-  A  Descriptive  Catalogue,  96  pages,  8vo.,  will  be  sent  free  and  free  of  postage, 
to  any  one  in  any  part  of  the  world,  who  will  furnish  his  address, 

4*-  Where  not  otherwise  stated,  all  of  the  Books  in  this  Catalogue  are  bound 
in  muslin. 


AMATEUR  MECHANICS'  WORKSHOP: 

A  treatise  containing  plain  and  concise  directions  for  the  manipula- 
tion of  Wood  and  Metals,  including  Casting,  Forging,  Brazing, 
Soldering  and  Carpentry.  By  the  author  of  the  "  Lathe  and  Its 
Uses."     Third  edition.     Illustrated.     8vo.  .  .  .         $3.00 

ANDRES.— A  Practical  Treatise  on  the  Fabrication  of  Volatile 
and  Fat  Varnishes,  Lacquers,  Siccatives  and  Sealing 
Waxes. 
From  the  German  of  Ervvin  Andres,  Manufacturer  of  Varnishes 
and  Lacquers.  With  additions  on  the  Manufacture  and  Application 
of  Varnishes,  Stains  for  Wood,  Horn,  Ivory,  Bone  and  Leather. 
From  the  German  of  Dr.  Emil  Winckler  and  Louis  E.  Andes. 
The  whole  translated  and  edited  by  William  T.  Brannt.  With  1 1 
illustrations.      i2mo.  .......         #2.50 

ARLOT-  A  Complete  Guide  for  Coach  Painters  : 

Translated  from  the  French  of  M.  Ari.OT,  Coach  Painter;  for 
eleven  years  Foreman  of  Painting  to  M.  Eherler,  Coach  Maker, 
Paris.  By  A.  A.  Fesquet,  Chemist  and  Engineer.  To  which  is 
added  an  Appendix,  containing  Information  respecting  the  Materials 
and  the  Practice  of  Coach  and  Car  Painting  and  Varnishing  in  the 
United  States  and  Great  Britain.     i2mo.  .         .         .         $1.25 

(0 


2  HENRY  CAREY  BA1RD  &  CO.'S  CATALOGUE. 

ARMENGAUD,  AMOROUX,  AND  JOHNSON.— The  Practi- 
cal Draughtsman's  Book  of  Industrial  Design,  and  Ma- 
chinist's and  Engineer's  Drawing  Companion: 
Forming  a  Complete  Course  of  Mechanical  Engineering  and  Archi- 
tectural Drawing.  From  the  French  of  M.  Armengaud  the  elder, 
Prof,  of  Design  in  the  Conservatoire  of  Arts  and  Industry,  Paris,  and 
MM.  Armengaud  the  younger,  and  Amcroux,  Civil  Engineers.  Re- 
written and  arranged  with  additional  matter  and  plates,  selections  from 
and  examples  of  the  most  useful  and  generally  employed  mechanism 
of  the  day.  By  William  JOHNSON,  Assoc.  Inst.  C.  E.  Illustrated 
by  fifty  folio  steel  plates,  and  fifty  wood-cuts.     A  new  edition,  4to., 

half  morocco $10.00 

ARMSTRONG. — The  Construction  and  Management  of  Steam 
Boilers  : 
By  R.  Armstrong,  C.  E.     With  an  Appendix  by  Robert  Mallet, 
C.  E.,  F.  R.  S.     Seventh  Edition.     Illustrated.     I  vol.  121110.         75 

ARROWSMITH.— Paper-Hanger's  Companion : 

A  Treatise  in  which  the  Practical  Operations  of  the  Trade  are 
Systematically  laid  clown:  with  Copious  Directions  Preparatory  to 
Papering;  Preventives  against  the  Effect  of  Damp  on  Walls;  the 
various  Cements  and  Pastes  Adapted  to  the  Several  Purposes  of 
the  Trade;  Observations  and  Directions  for  the  Panelling  and 
Ornamenting  of  Rooms,  etc.  By  James  Arrowsmith.  i2mo., 
cloth £1-25 

ASHTON. — The  Theory  and  Practice  of  the  Art  of  Designing 
Fancy  Cotton  and  Woollen  Cloths  from  Sample  : 
Giving  full  instructions  for  reducing  drafts,  as  well  as  the  methods  of 
spooling  and  making  out  harness  for  cross  drafts  and  finding  any  re- 
quired reed;  with  calculations  and  tables  of  yarn.  By  Frederic  T. 
Ashton,  Designer,  West  Pittsfield,  Mass.  With  fifty-two  illustrations. 
One  vol.  folio B $10.00 

AUERBACH— CROOKES.— Anthracen : 

Its  Constitution,  Properties,  Manufacture  and  Derivatives,  including 
Artificial  Alizarin,  Anthrapurpurin,  etc.,  with  their  applications  in 
Dyeing  and  Printing.  By  G.  Auerbach.  Translated  and  edited 
fiom  the  revised  manuscript  of  the  Author,  by  Wm.  Crookes,  F.  R. 
S.,  Vice-President  of  the  Chemical  Society.     Svo.       .  .         $5.00 

BAIRD.— Miscellaneous     Papers     on     Economic     Questions. 
By   Henry  Carey  Baird.     {In  preparation.) 

BAIRD.— The  American  Cotton  Spinner,  and  Manager's  and 
Carder's  Guide : 
A  Practical  Treatise  on  Cotton  Spinning;  giving  the  Dimensions  and 
Speed  of  Machinery,  Draught  and  Twist  Calculations,  etc.;  with 
notices  of  recent  Improvements:  together  with  Rules  and  Examples 
for  making  changes  in  the  sizes  and  numbers  of  Roving  and  Yarn. 
Compiled  from  the  papers  of  the  late  Robert  H.  Baird.     i2ino. 

gi.50 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 


BAIRD.— Standard  Wages  Computing  Tables  : 

An  Improvement  in  all  former  Methods  of  Computation,  so  arranged 
that  wages  for  days,  hours,  or  fractions  of  hours,  at  a  specified  rate 
per  day  or  hour,  may  be  ascertained  at  a  glance.  By  T.  Spangler 
BAIRD.     Oblong  folio $S-°° 

BAKER.— Long-Span  Railway  Bridges: 

Comprising  Investigations  of  the  Comparative  Theoretical  and 
Practical  Advantages  of  the  various  Adopted  or  Proposed  Type 
Systems  of  Construction ;  with  numerous  Formulae  and  Tables.  By 
B.  Baker.     121110.  $i-5° 

BAKER.— The  Mathematical  Theory  of  the  Steam-Engine  : 
With   Rules  at  length,  and   Examples  worked   out   for  the   use  of 
Practical   Men.     By  T.    Baker,   C.    E.,  with   numerous   Diagrams. 
Sixth  Edition,  Revised  by  Prof.  J.  R.  Young.     121110.         .  75 

BARLOW. — The  History  and  Principles  of  Weaving,  by 
Hand  and  by  Power : 
Reprinted,  with  Considerable  Additions,  from  "  Engineering,"  with 
a  chapter  on  Lace-making  Machinery,  reprinted  from  the  Journal  of 
the  "Society  of  Arts."  By  Alfred  Barlow.  With  several  hundred 
illustrations.     8vo.,  443  pages  .  ...       $10.00 

BARR. — A  Practical  Treatise  on  the  Combustion  of  Coal: 
Including  descriptions  of  various  mechanical  devices   for  the   Eco- 
nomic Generation  of  Heat  by  the  Combustion  of  Fuel,  whether  solid, 
liquid  or  gaseous.    8vo.     .  .  ....         $2.50 

BARR.— A  Practical  Treatise  on  High  Pressure  Steam  Boilers: 
Including  Results  of  Recent  Experimental  Tests  of  Boiler  Materials, 
together  with  a  Description  of  Approved  Safety  Apparatus,  Steam 
Pumps,  Injectors  and  Economizers  in  actual  use.  By  Wm.  M.  Barr. 
204  Illustrations.     8vo $3-°° 

BAUERMAN.-A  Treatise  on  the  Metallurgy  of  Iron: 

Containing  Outlines  of  the  History  of  Iron  Manufacture,  Methods  of 
Assay,  and  Analysis  of  Iron  Ores,  Processes  of  Manufacture  of  Iron 
and  Steel,  etc.,  etc.  By  H.  Bauerman,  F.  G.  S.,  Associate  of  the 
Royal  School  of  Mines.  Fifth  Edition,  Revised  and  Enlarged. 
Illustrated  with  numerous  Wood  Engravings  from  Drawings  by  J.  B. 
Jordan.     i2mo.  $2.00 

BAYLES.— House  Drainage  and  Water  Service  : 

In  Cities,  Villages  and  Rural  Neighborhoods.  With  Incidental  Con. 
sideration  of  Certain  Causes  Affecting  the  Healthfulness  of  Dwell- 
ings. By  James  C.  Bayles,  Editor  of  "  The  Iron  Age  "  and  "  The 
Metal  Worker."     With  numerous  illustrations.     8vo.  cloth,    _   $3.00 

BEANS.— A    Treatise   on    Railway  Curves    and   Location  of 
Railroads : 
By  E.  W.  Beans,  C.  E.     Illustrated.     i2mo.     Tucks        .         $1.50 

BECKETT.— A  Rudimentary  Treatise  on  Clocks,  and  Watches 

and  Bells  : 

By  Sir  Edmund  Beckett,  Bart.,  LL.  D.,  Q.  C.  F.  R.  A.  S.     With 

numerous   illustrations.       Seventh   Edition,  Revised  and    Enlarged. 

l2mo $2.25 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 


BELL. — Carpentry  Made  Easy: 

Or,  The  Science  and  Art  of  Framing  on  a  New  and  Improved 
System.  With  Specific  Instructions  for  Building  Balloon  Frames,  Barn 
Frames,  Mill  Frames,  Warehouses,  Church  Spires,  etc.  Comprising 
also  a  System  of  Bridge  Building,  with  Bills,  Estimates  of  Cost,  and 
valuable'  Tables.  Illustrated  by  forty-four  plates,  comprising  nearly 
200  figures.  By  William  E.  Bell,  Architect  and  Practical  Builder. 
8vo.  .         .  $5-°° 

BEMROSE. — Fret-Cutting  and  Perforated  Carving: 

With  fifty-three  practical  illustrations.  By  W.  Bemrose,  Jr.  i  vol. 
quarto         ..........  $3-°° 

BEMROSE.— Manual  of  Buhl-work  and  Marquetry: 

With  Practical  Instructions  for  Learners,  and  ninety  colored  designs. 
By  W.  Bemrose,  Jr.     i  vol.  quarto  ....         $3.00 

BEMROSE.— Manual  of  Wood  Carving: 

With  Practical  Illustrations  for  Learners  of  the  Art,  and  Original  and 
Selected  Designs.  By  William  Bemrose,  Jr.  With  an  Intro 
duction  by  Llewellyn  Jewitt,  F.  S.  A.,  etc.  With  128  illustra- 
tions, 4to.  $3-°° 

BILLINGS.— Tobacco : 

Its  History,  Variety,  Culture,  Manufacture,  Commerce,  and  Various 
Modes  of  Use.  By  E.  R.  Billings.  Illustrated  by  nearly  200 
engravings.     8vo.       .....-••         $3-°° 

BIRD. — The  American  Practical  Dyers'  Companion: 

Comprising  a  Description  of  the  Principal  Dye-Stuffs  and  Chemicals 
used  in  Dyeing,  their  Natures  and  Uses;  Mordants,  and  How  Made; 
with  the  best  American,  English,  French  and  German  processes  for 
Bleaching  and  Dyeing  Silk,  Wool,  Cotton,  Linen,  Flannel,  Felt, 
Dress  Goods,  Mixed  and  Hosiery  Yarns,  Feathers,  Grass,  Felt,  Fur, 
Wool,  and  Straw  Hats,  Jute  Yarn,  Vegetable  Ivory,  Mats,  Skins, 
Furs,  Leather,  etc.,  etc.  By  Wood,  Aniline,  and  other  Processes, 
together  with  Remarks  on  Finishing  Agents,  and  Instructions  in  the 
Finishing  of  Fabrics,  Substitutes  for  Indigo,  Water- Proofing  of 
Materials,  Tests  and  Purification  of  Water,  Manufacture  of  Aniline 
and  other  New  Dye  Wares,  Harmonizing  Colors,  etc.,  etc. ;  embrac- 
ing in  all  over  800  Receipts  for  Colors  and  Shades,  accompanied  by 
170  Dyed  Samples  of  Raw  Materia/s  and  Fabrics.  By.F.  J.  Bird, 
Practical  Dyer.  Author  of  "  The  Dyers'  Hand-Book."    8vo.     #10.00 

BLINN. — A  Practical  Workshop  Companion  for  Tin,  Sheet- 
Iron,  and  Copper-plate  Workers  : 
Containing  Rules  for  describing  various  kinds  of  Patterns  used  by 
Tin,  Sheet-Iron  and  Copper-plate  Workers;  Practical  Geometry; 
Mensuration  of  Surfaces  and  Solids ;  Tables  of  the  Weights  of 
Metals,  Lead-pipe,  etc.;  Tables  of  Areas  and  Circumference? 
of  Circles;  Japan,  Varnishes,  Lackers,  Cements,  Compositions,  etc., 
etc.  By  Leroy  J.  Blinn,  Master  Mechanic.  With  over  One 
Hundred  Illustrations.      i2mo.  .....  $2.50 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 


BOOTH. — Marble  Worker's  Manual: 

Containing  Practical  Information  respecting  Marbles  in  general,  their 
Cutting,  Working  and  Polishing;  Veneering  of  Marble;  Mosaics; 
Composition  and  Use  of  Artificial  Marble,  Stuccos,  Cements,  Receipts, 
Secrets,  etc.,  etc.  Translated  from  the  French  by  M.  L.  Booth. 
With  an  Appendix  concerning  American  Marbles.    l2mo.,  cloth  $1.50 

BOOTH  and  MORFIT.— The  Encyclopaedia  of  Chemistry, 
Practical  and  Theoretical : 
Embracing  its  application  to  the  Arts,  Metallurgy,  Mineralogy, 
Geology,  Medicine  and  Pharmacy.  By  James  C.  Booth,  Melter 
and  Refiner  in  the  United  States  Mint,  Professor  of  Applied  Chem- 
istry in  the  Franklin  Institute,  etc.,  assisted  by  Campbell  Morfit, 
author  of  "  Chemical  Manipulations,"  etc.  Seventh  Edition.  Com- 
plete in  one  volume,  royal  8vo.,  978  pages,  with  numerous  wood-cuts 
and  other  illustrations         .......         $5-°° 

BRAMWELL-  The  Wool  Carder's  Vade-Mecum  : 

A  Complete  Manual  of  the  Art  of  Carding  Textile  Fabrics.  By  W. 
C.  Bramwell.  Third  Edition,  revised  and  enlarged.  Illustrated, 
pp.  4.00.      l2mo.         ........         $2.50 

BRANNT. — A  Practical  Treatise  on  the  Raw  Materials  and  the 
Distillation  and  Rectification  of  Alcohol,  and  the  Prepara- 
tion of  Alcoholic  Liquors,  Liqueurs,  Cordials,  Bitters,  etc. : 
Edited  chiefly  from  the  German  of  Ur.  K.  Stammer,  Dr.  F.  Eisner, 
and  E.  Schubert.     By  Wm.  T.  Brannt.     Illustrated  by  thirty -one 
engravings.      l2mo.  .......         $2.50 

BRANNT.— The  Techno-Chemical  Receipt  Book: 

Containing  several  thousand  Receipts  comprising  the  latest  and  most 
useful  discoveries  in  Chemical  Technology  and  Industry.  Edited 
from  the  German  of  Drs.  E.  Winckler,  Heintze  and  Mierzinski, 
with  additions  by  W.  T.  Brannt.      [In preparation.) 

BROWN. — Five  Hundred  and  Seven  Mechanical  Movements: 
Embracing  all  those  which  are  most  important  in  Dynamics,  Hy- 
draulics, Hydrostatics,  Pneumatics,  Steam-Engines,  Mill  and  other 
Gearing,  Presses,  Horology  and  Miscellaneous  Machinery;  and  in- 
cluding many  movements  never  before  published,  and  several  of 
which  have  only  recently  come  into  use.  By  Henry  T.  Brown. 
iamo.        ..........         $1.00 

BUCKMASTER. — The  Elements  of  Mechanical  Physics  : 
By  J.   C.   Buckmaster.       Illustrated    with    numerous    engravings. 
i2mo.        ....  $1-5° 

BULLOCK. — The  American  Cottage  Builder  : 

A  Series  of  Designs,  Plans  and  Specifications,  from  $200  to  $20,000, 
for  Homes  for  the  People ;  together  with  Warming,  Ventilation, 
Drainage,  Painting  and  Landscape  Gardening.  By  John  Bullock, 
Architect  and  Editor  of  "  The  Rudiments  of  Architecture  and 
Building,"  etc.,  etc.     Illustrated  by  75  engravings.     8vo.  $3.50 

BULLOCK. — The  Rudiments  of  Architecture  and  Building : 
For  the  use  of  Architects,   Builders,   Draughtsmen,   Machinists,  En- 
gineers and  Mechanics.     Edited  by  John  Bullock,  author  of  "  The 
American  Cottage  Builder."   Illustrated  by  250  Engravings.  8vo.  $3.50 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 


BURGH.— Practical    Rules    for    the    Proportions    of     Modern 
Engines  and  Boilers  for  Land  and  Marine  Purposes. 
By  N.  P.  Burgh,  Engineer.     i2mo.  ....         $i-5° 

BURNS. — The  American  Woolen  Manufacturer: 

A  Practical  Treatise  on  the  Manufacture  of  Woolens,  in  two  parts. 
Part  First  gives  full  and  explicit  instructions  upon  Drafting,  Cross- 
Drawing,  Combining  Weaves,  and  the  correct  arrangement  of  Weights, 
Colors  and  Sizes  of  Yarns  to  produce  any  desired  fabric.  Illustrated 
with  diagrams  of  various  weavings,  and  twelve  samples  of  cloth  for 
explanation  and  practice.  Part  Second  is  fully  supplied  with  ex- 
tended Tables,  Rules,  Examples,  Explanations,  etc.;  gives  full  and 
practical  information,  in  detailed  order,  from  the  stock  department  to 
the  market,  of  the  proper  selection  and  use  of  the  various  grades  and 
staples  of  wool,  with  the  admixture  of  waste,  cotton  and  shoddy;  and 
the  proper  application  and  economical  use  of  the  various  oils,  drugs, 
dye  stuffs,  soaps,  belting,  etc.  Also,  the  most  approved  method  for 
Calculating  and  Estimating  the  Cost  of  Goods,  for  all  Wool,  Wool 
Waste  and  Cotton  and  Cotton  Warps.  With  Examples  and  Calcula- 
tions on  the  Circular  motions  of  Wheels,  Pinions,  Drums,  Pulleys 
and  Gears,  how  to  speed  them,  etc.  The  two  parts  combined  form  a 
whole  work  on  the  American  way  of  manufacturing  more  complete 
than  any  yet  issued.     Ey  George  C.  Burns.     8vo.  .         .         $6.50 

BYLES.— Sophisms    of     Free    Trade    and    Popular    Political 

Economy  Examined. 

By  a  Barrister   (Sir  John  Barnard  Byles,  Judge  of  Common 

Pleas).       From  the    Ninth    English   Edition,  as    published    by    the 

Manchester  Reciprocity  Association.      121110.  .  .         $1.25 

BOWMAN. — The  Structure  of  the  Wool  Fibre  in  its  Relation 
to  the  Use  of  Wool  for  Technical  Purposes : 
Being  the  substance,  with  additions,  of  Five  Lectures,  delivered  at 
the  request  of  the  Council,  to  the  members  of  the  Bradford  Technical 
College,  and  the  Society  of  Dyers  and  Colorists.  By  F.  II.  Bow- 
man, D.  Sc,  F.  R.  S.  E.,  F.  L.  S.  Illustrated  by  32  engravings. 
8vo #6.50 

BYRN.— The  Complete  Practical  Distiller: 

Comprising  the  most  perfect  and  exact  Theoretical  and  Practical  De- 
scription of  the  Art  of  Distillation  and  Rectification;  including  all  of 
the  most  recent  improvements  in  distilling  apparatus;  instructions  for 
preparing  spirits  from  the  numerous  vegetables,  fruits,  etc  ;  directions 
for  the  distillation  and  preparation  of  all  kinds  of  brandies  and  othei 
spirits,  spirituous  and  other  compounds,  etc.  By  M.  La  Fayette 
Byrn,  M.  D.  Eighth  Edition.  To  which  are  added  Practical 
Directions  for  Distilling,  from  the  French  of  Th.  Fling,  Brewer  and 
Distiller.      i2mo •  $i-S° 

BYRNE. — Hand-Book  for  the  Artisan,  Mechanic,  and   Engi- 
neer: 
Comprising  the  Grinding  and  Sharpening  of  Cutting  Tools,  Abrasive 
Processes,   Lapidary  Work,  Gem  and  Glass   Engraving,    Varnishing 
and  Lackering,  Apparatus,  Materials  and  Processes  for  Grinding  and 


HENRY  CAREY  BA1RD  &  CO.'S  CATALOGUE. 


Polishing,  etc.     By  Oliver  Byrne.     Illustrated  by    185  wood  en- 
gravings.    8vo.  ......••         $5,0° 

BYRNE.— Pocket-Book  for  Railroad  and  Civil  Engineers  : 

Containing  New,  Exact  and  Concise  Methods  for  Laying  out  Railroad 
Curves,  Switches,  Frog  Angles  and  Crossings;  the  Staking  out  of 
work;  Levelling;  the  Calculation  of  Cuttings;  Embankments;  Earth- 
work   etc.     By  Oliver   Byrne.     i8mo.,  full  bound,  pocket-book 

form *i-75 

BYRNE.— The  Practical  Metal-Worker's  Assistant: 

Comprising  Metallurgic  Chemistry;  the  Arts  of  Working  all  Metals 
and  Alloys;   Forging  of  Iron  and  Steel;   Hardening  and  Tempering; 
Melting  and  Mixing;  Casting  and  Founding;  Works  in  Sheet  Metal; 
the  Processes  Dependent  on  the  Ductility  of  the  Metals;   Soldering; 
and   the  most   Improved  Processes  and   Tools  employed  by  Metal- 
workers.    With  the  Application  of  the  Art  of  Electro-Metallurgy  to 
Manufacturing  Processes;   collected  from  Original  Sources,  and  from 
the    works     of    Holtzapffel,    Bergeron,     Leupold,    Plunder,    Napier, 
Scoffern,  Clay,  Fairbairn  and  others.     By  Oliver  Byrne.     A  new, 
revised   and   improved  edition,  to  which  is  added  an  Appendix,  con- 
taining The  Manufacture  of  Russian  Sheet-Iron.      By  John  Percy, 
M.  D.,  F.  R.  S.     The  Manufacture  of  Malleable  Iron  Castings,  and 
Improvements  in   Bessemer  Steel.     By  A.  A.  Fesquet,  Chemist  and 
Engineer.     With   over  Six   Hundred   Engravings,  Illustrating  every 
Branch  of  the  Subject.     8vo.      ......         $7-°° 

BYRNE.— The  Practical  Model  Calculator: 

For  the   Engineer,  Mechanic,  Manufacturer  of  Engine  Work,  Nava'i 
Architect,  Miner  and  Millwright.      By  Oliver  Byrne.     8vo.,  nearly 
600  pages  ......  •  $4 5° 

CABINET  MAKER'S  ALBUM  OF  FURNITURE: 

Comprising  a  Collection  of  Designs  for  various  Styles  of  Furniture. 
Illustrated  by  Forty-eight   Large   and   Beautifully   Engraved   Plates. 

Oblong,  8vo •         •         #3-5° 

CALLINGHAM.— Sign  Writing  5>nd  Glass  Embossing: 

A    Complete   Practical    Illustrated    Manual   of  the   Art.     By  James 

CALLINGHAM.      121110 $1-5° 

CAMPIN.— A  Practical  Treatise  on  Mechanical  Engineering: 
Comprising  Metallurgy,  Moulding,  Casting,  Forging,  Tools,  Work- 
shop  Machinery,  Mechanical  Manipulation,  Manufacture  of  Steam- 
Engines,  etc.  With  an  Appendix  on  the  Analysis  of  Iron  and  Iron 
Ores.  By  Francis  Campin,  C.  E.  To  which  are  added,  Observations 
on  the  Construction  of  Steam  Boilers,  and  Remarks  upon  Furnaces 
used  for  Smoke  Prevention ;  with  a  Chapter  on  Explosions.  By  R. 
Armstrong,  C.  E„  and  John  Bourne.  Rules  for  Calculating  the 
Change  Wheels  for  Screws  on  a  Turning  Lathe,  and  for  a  Wheel- 
cutting  Machine.  By  J.  La  NlCCA.  Management  of  Steel,  Includ- 
ing Forging,  Hardening,  Tempering,  Annealing,  Shrinking  and 
Expansion;  and  the  Case-hardening  of  Iron.  By  G.  Ede.  8vo. 
Illustrated  with  twenty-nine  plates  and  100  wood  engravings       $5.00 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 


CAREY.— A  Memoir  of  Henry  C.  Carey. 

Bv  Dr.  Wm.  Elder.    With  a  portrait.     8vo.,  cloth         .         .        75 

CAREY.— The  Works  of  Henry  C.  Carey : 

Harmony  of  Interests  :    Agricultural,  Manufacturing  and  Commer- 
cial.    Svo.  .....  .  #1.50 

Manual  of  Social  Science.     Condensed  from  Carey's  "  Principles 
of  Social  Science."     By  Kate  McKean.   i  vol.  i2mo.      .         $2.25 
Miscellaneous  Works.     With  a  Portrait.    2  vols.    8vo.  $6.00 

Past,  Present  and  Future.     8vo.    .....         $2.50 

Principles  of  Social  Science.     3  volumes,  8vo.      .         .       $io.oc 
The   Slave-Trade,  Domestic  and   Foreign;  Why  it  Exists,  and 
How  it  may  be  Extinguished  (1853).     8vo.        .  .  .         #2.00 

The  Unity  of  Law :  As  Exhibited  in  the  Relations  of  Physical, 
Social,  Mental  and  Moral  Science  (1872).     8vo.  .  .         $3.50 

CLARK. — Tramways,  their  Construction  and  Working : 

Embracing  a  Comprehensive  History  of  the  System.  With  an  ex- 
haustive analysis  of  the  various  modes  of  traction,  including  horse- 
power, steam,  heated  water  and  compressed  air;  a  description  of  the 
varieties  of  Rolling  stock,  and  ample  details  of  cost  and  working  ex- 
penses. By  D.  Kinnear  Clark.  Illustrated  by  over  200  wood 
engravings,  and  thirteen  folding  plates.     2  vols.     8vo.  .      $12.50 

COLBURN.— The  Locomotive  Engine: 

Including  a  Description  of  its  Structure,  Rules  for  Estimating  its 
Capabilities,  and  Practical  Observations  on  its  Construction  and  Man- 
agement.    By  Zerah  Colburn.    Illustrated.     i2mo.         .         $1.00 

COLLENS.— The  Eden  of  Labor;  or,  the  Christian  Utopia. 
By  T.  Wharton  Collens,  author  of  "  Humanics,"    "  The  Historv 
of  Charity,"  etc.     i2mo.     Paper  cover,  $1.00;   Cloth  .         $1.25 

COOLEY. — A  Complete  Practical  Treatise  on  Perfumery: 

Being  a  Hand-book  of  Perfumes,  Cosmetics  and  other  Toilet  Articles. 
With  a  Comprehensive  Collection  of  Formulae.  By  Arnold  J. 
Cooley.    i2mo. $1.50 

COOPER.— A  Treatise  on  the  use  of  Belting  for  the  Trans- 
mission of  Power. 
With  numerous  illustrations  of  approved  and  actual  methods  of  ar 
ranging  Main  Driving  and  Quarter  Twist  Belts,  and  of  Belt  Faster, 
ings.  Examples  and  Rules  in  great  number  for  exhibiting  and  cal- 
culating the  size  and  driving  power  of  Belts.  Plain,  Particular  and 
Practical  Directions  for  the  Treatment,  Care  and  Management  of 
Belts.  Descriptions  of  many  varieties  of  Beltings,  together  with 
chapters  on  the  Transmission  of  Power  by  Ropes ;  by  Iron  and 
Wood  Frictional  Gearing;  on  the  Strength  of  Belting  Leather;  and 
on  the  Experimental  Investigations  of  Morin,  Briggs,  and  others.  By 
John  H.  Cooper,  M.  E.  8vo $3.50 

CRAIK. — The  Practical  American  Millwright  and  Miller. 

By  David  Craik,  Millwright.  Illustrated  by  numerous  wood  en- 
gravings and  two  folding  plates.     Svo $5.00 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 


CRISTIANI.— A  Technical  Treatise  on  Soap  and  Candles: 
With  a   Glance  at  the  Industry  of  Fats  and  Oils.     By  R.  S.  Cris- 
tiani,  Chemist.     Author  of  "Perfumery  and  Kindred  Arts."     Illus- 
trated by  176  engravings.     581  pages,  8vo.         .  .  .  $7-5° 
CRISTIANI.— Perfumery  and  Kindred  Arts: 

A  Comprehensive  Treatise  on  Perfumery,  containing  a  History  of 
Perfumes  from  the  remotest  ages  to  the  present  time.  A  complete 
detailed  description  of  the  various  Materials  and  Apparatus  used  in 
the  Perfumer's  Art,  with  thorough  Practical  Instruction  and  careful 
Formula,  and  advice  for  the  fabrication  of  all  known  preparations  of 
the  day,  including  Essences,  Tinctures,  Extracts,  Spirits,  Waters, 
Vinegars,  Pomades,  Powders,  Paints,  Oils,  Emulsions,  Cosmetics, 
Infusions,  Pastilles,  Tooth  Powders  and  Washes,  Cachous,  Hair  Dyes, 
Sachets,  Essential  Oils,  Flavoring  Extracts,  etc. ;  and  full  details  for 
making  and  manipulating  Fancy  Toilet  Soaps,  Shaving  Creams,  etc., 
by  new  and  improved  methods.  With  an  Appendix  giving  hints  and 
advice  for  making  and  fermenting  Domestic  Wines,  Cordials,  Liquors, 
Candies,  Jellies,  Syrups,  Colors,  etc.,  and  for  Perfuming  and  Flavor- 
ing Segars,  Snuff  and  Tobacco,  and  Miscellaneous  Receipts  for 
various  useful  Analogous  Articles.  By  R.  S.  CRISTIANI,  Con- 
sulting Chemist  and  Perfumer,  Philadelphia.  8vo.  .  .  #5-OG 
CUPPER.— The  Universal  Stair-Builder  : 

Being  a  new  Treatise  on  the  Construction  of  Stair-Cases  and  Hand- 
Rails;  showing  Plans  of  the  various  forms  of  Stairs,  method  of 
Placing  the  Risers  in  the  Cylinders,  general  method  of  describing 
the  Face  Moulds  for  a  Hand-Rail,  and  an  expeditious  method  of 
Squaring  the  Rail.  Useful  also  to  Stonemasons  constructing  Stone 
Stairs  and  Hand-Rails  ;  with  a  new  method  of  Sawing  the  Twist 
Part  of  any  Hand-Rail  square  from  the  face  of  the  plank,  and  to  a 
parallel  width.  Also,  a  new  method  of  forming  the  Easings  of  the 
Rail  by  a  gauge ;  preceded  by  some  necessary  Problems  in  Practical 
Geometry,  with  the  Sections  of  Prismatic  Solids.  Illustrated  by  29 
plates.  By  R.  A.  Cupper,  Architect,  author  of  "The  Practical 
Stair-Builder's  Guide."     Third  Edition.     Large  4*0.  .         £2.50 

DAVIDSON.— A  Practical  Manual  of  House  Painting,  Grain- 
ing, Marbling,  and  Sign- Writing: 
Containing  full  information  on  the  processes  of  House  Painting  in 
Oil  and  Distemper,  the  Formation  of  Letters  and  Practice  of  Sign- 
Writing,  the  Principles  of  Decorative  Art,  a  Course  of  Elementary 
Drawing  for  House  Painters,  Writers,  etc.,  and  a  Collection  of  Useful 
Receipts.  With  nine  colored  illustrations  of  Woods  and  Marbles, 
and  numerous  wood  engravings.     By  Ellis  A.  Davidson;     i2mo. 

#3-°° 

DAVIES. A   Treatise   on    Earthy   and   Other   Minerals    and 

Mining  : 
By   D.  C.  Davies,   F.  G.  S.,  Mining   Engineer,   etc.     Illustrated  by 
76  Engravings.     i2mo $5-°° 


io  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

DAVIES. — A  Treatise  on  Metalliferous  Minerals  and  Mining:  , 
By  D.  C.  DAVIES,  F.  G.  S.,  Mining  Engineer,  Examiner  of  Mines, 
Quarries  and  Collieries.  Illustrated  by  148  engravings  of  Geological 
Formations,  Mining  Operations  and  Machinery,  drawn  from  the 
practice  of  all  parts  of  the  world.    2d  Edition,  i2mo.,  450  pages  $5.00 

DAVIES.— A  Treatise  on  Slate  and  Slate  Quarrying: 

Scientific,  Practical  and  Commercial.  By  D.  C.  Davies,  F.  G.  S., 
Mining  Engineer,  etc.  With  numerous  illustrations  and  folding 
plates.      i2mo.  ........  $2.50 

DAVIS.— A  Practical  Treatise  on  the  Manufacture  of  Bricks, 

Tiles,  Terra-Cotta,  etc. : 
Including  Common,  Pressed,  Ornamentally  Shaped,  and   Enamelled 
Bricks,    Drain-Tiles,  Straight    and   Curved   Sewer-Pipes,  Fire-Clays, 
Fire- Bricks,   Terra-Cotta,    Roofing-Tiles,   Flooring-Tiles,    Art-Tiles, 
Mosaic   Plates,  and  Imitation   of  Intarsia  or   Inlaid   Surfaces;  com- 
prising every  important   Product  of  Clay  employed  in  Architecture, 
Engineering,  the  Blast-Furnace,  for  Retorts,  etc.,  with  a  Histoiy  and 
the  Actual   Processes  in   Handling,  Disintegrating,  Tempering,  and 
Moulding   the  Clay  into  Shape,   Drying   Naturally  and  Artificially, 
Setting  and  Burning,  Enamelling  in  Polychrome  Colors,  Composition 
and  Application  of  Glazes,  etc.;  including  Full  Detailed  Descriptions 
of  the  most  modern  Machines,  Tools,  Kilns,  and  Kiln-Roofs  used. 
By  Charles  Thomas  Davis.     Illustrated  by  228  Engravings  and 
6  Plates.     8vo.,  472  pages  .  .  ....         #5.00 

DAVIS.— The  Manufacture  of  Leather: 

Being  a  description  of  all  of  the  Processes  for  the  Tanning,  Tawing, 
Currying,  finishing  and  Dyeing  of  every  kind  of  Leather  ;  including 
the  various  Raw  Materials  and  the  Methods  for  Determining  their 
Values;  the  Tools,  Machines,  and  all  Details  of  Importance  con- 
nected with  an  Intelligent  and  Profitable  Prosecution  of  the  Art,  with 
Special  Reference  to  the  Best  American  Practice.  To  which  are 
added  Complete  Lists  of  all  American  Patents  for  Materials,  Pro- 
cesses, Tools,  and  Machines  for  Tanning,  Currying,  etc.  By  Charles 
Thomas  Davis.  Illustrated  by  302  engravings  and  12  Samples  of 
Dyed  Leathers.  One  vol.,  8vo.,  824  pages  .  .  .  $10.00 
DAWIDOWSKY— BRANNT.— A    Practical   Treatise   on   the 

Raw  Materials  and  Fabrication  of  Glue,  Gelatine,  Gelatine 

Veneers  and  Foils,  Isinglass,  Cements,  Pastes,  Mucilages, 

etc. : 
Based  upon  Actual  Experience.  By  F.  Dawidowsky,  Technical 
Chemist.  Translated  from  the  German,  with  extensive  additions, 
including  a  description  of  the  most  Recent  American  Processes,  by 
William  T.  Brannt,  Graduate  of  the  Royal  Agricultural  College 
of  Eldena,  Prussia.      ^5  Engravings.      i2mo.     .  .  .         $2.50 

DE  GRAFF.— The  Geometrical  Stair-Builders'  Guide: 

Being  a  Plain  Practical  System  of  Hand-Railing,  embracing  all  its 
necessary  Details,  and  Geometrically  Illustrated  by  twenty-two  Steel 
Engravings;  together  with  the  use  of  the  most  approved  principles 
ot   Practical  Geometry.      By  Simon  De  Graff,  Architect.      4to. 

#2.50 


HENRY  CAREY  BAIRD  &  CO'.S  CATALOGUE.  n 

DE  KONINCK— DIETZ.— A    Practical    Manual   of   Chemical 
Analysis  and  Assaying: 

As  applied  to  the  Manufacture  of  Iron  from  its  Ores,  and  to  Cast  Iron, 
Wrought  Iron,  and  Steel,  as  found  in  Commerce.  By  L.  L.  De 
Koninck,  Dr.  Sc,  and  E.  Dietz,  Engineer.  Edited  with  Notes,  by 
Robert  Mallet,  F.  R.  S.,  F.  S.  G.,  M.  I.  C.  E.,  etc.  American 
Edition,  Edited  with  Notes  and  an  Appendix  on  Iron  Ores,  by  A.  A. 
Fesquet,  Chemist  and  Engineer.      i2mo.  .  .  .         $2.50 

DUNCAN.— Practical  Surveyor's  Guide: 

Containing  the  necessary  information  to  make  any  person  of  com- 
mon capacity,  a  finished  land  surveyor  without  the  aid  of  a  teacher. 
By  Andrew  Duncan.     Illustrated.     i2mo.      .         .         .        $1.25 

DUPLAIS. — A  Treatise  on  the  Manufacture  and  Distillation 
of  Alcoholic  Liquors : 
Comprising  Accurate  and  Complete  Details  in  Regard  to  Alcohol 
from  Wine,  Molasses,  Beets,  Grain,  Rice,  Potatoes,  Sorghum,  Aspho- 
del, Fruits,  etc. ;  with  the  Distillation  and  Rectification  of  Brandy. 
Whiskey,  Rum,  Gin,  Swiss  Absinthe,  etc.,  the  Preparation  of  Aro- 
matic Waters,  Volatile  Oils  or  Essences,  Sugars,  Syrups,  Aromatic 
Tinctures,  Liqueurs,  Cordial  Wines,  Effervescing  Wines,  etc.,  the 
Ageing  of  Brandy  and  the  improvement  of  Spirits,  with  Copious 
Directions  and  Tables  for  Testing  and  Reducing  Spirituous  Liquors, 
etc.,  etc.  Translated  and  Edited  from  the  French  of  MM.  Dupi.AIS, 
Aine  et  Jeune.  By  M.  McKennie,  M.  D.  To  which  are  added  the 
United  States  Internal  Revenue  Regulations  for  the  Assessment  and 
Collection  of  Taxes  on  Distilled  Spirits.  Illustrated  by  fourteen 
folding  plates  and  several  wood  engravings.     743  pp.  8vo.         $10  00 

DUSSAUCE. — A  General  Treatise  on  the  Manufacture  of 
Vinegar: 
Theoretical  and  Practical.  Comprising  the  various  Methods,  by  the 
Slow  and  the  Quick  Processes,  with  Alcohol,  Wine,  Grain,  Malt, 
Cider,  Molasses,  and  Beets ;  as  well  as  the  Fabrication  of  Wood 
Vinegar,  etc.,  etc.     By  Prof.  H.  Dussauce.     8vo.  .         $5  00 

DUSSAUCE.— Practical  Treatise  on  the  Fabrication  of  Matches, 
Gun  Cotton,  and  Fulminating  Powder. 
By  Professor  H.  Dussauce.     i2mo.  .         .         .         .         ^3  00 

DYER  AND  COLOR-MAKER'S  COMPANION: 

Containing  upwards  of  two  hundred  Receipts  for  making  Colors,  on 
the  most  approved  principles,  for  all  the  various  styles  and  fabrics  now 
in  existence;  with  the  Scouring  Process,  and  plain  Directions  for 
Preparing,  Washing-off,  and  Finishing  the  Goods.      i2mo.         $1   25 

EDWARDS. — A  Catechism  of  the  Marine  Steam-Engine, 

For  the  use  of  Engineers,  Firemen,  and  Mechanics.  A  Practical 
Work  for  Practical  Men.  By  Emory  Edwards,  Mechanical  Engi- 
neer. Illustrated  by  sixty-three  Engravings,  including  examples  of 
the  most  modern  Engines.  Third  edition,  thoroughly  revised,  with 
much  additional  matter.      l2mo.  414  pages        .  .  .         |2  00 

EDWARDS. — Modern  American  Locomotive  Engines, 

Their  Design,  Construction  and  Management.  By  Emory  Edwards. 
Illustrated  l2mo $2  00 


12  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

EDWARDS. — Modern  American  Marine  Engines,  Boilers,  and 
Screw  Propellers, 

Their  Design  and  Construction.  Showing  the  Present  Practice  of 
the  most  Eminent  Engineers  and  Marine  Engine  Builders  in  the 
United  States.    Illustrated  by  30  large  and  elaborate  plates.  4to.  $5.00 

EDWARDS.— The  Practical  Steam  Engineer's  Guide 

In  the  Design,  Construction,  and  Management  of  American  Stationary, 
Portable,  and  Steam  Fire- Engines,  Steam  Pumps,  Boilers,  Injectors, 
Governors,  Indicators,  Pistons  and  Rings,  Safety  Valves  and  Steam 
Gauges.  For  the  use  of  Engineers,  Firemen,  and  Steam  Users.  By 
Emory  Edwards.  Illustrated  by  119  engravings.  420  pages. 
I2mc.       ..........         $2  50 

ELDER. — Conversations  on  the  Principal  Subjects  of  Political 
Economy. 
By  Dr.  William  Elder.  8vo |2  50 

ELDER.— Questions  of  the  Day, 

Economic  and  Social.     By  Dr.  William  Elder.  Svo.     .         $3  00 

ELDER. — Memoir  of  Henry  C.  Carey. 

By  Dr.  William  Elder.  Svo.  cloth 75 

ERNL— Mineralogy  Simplified. 

Easy  Methods  of  Determining  and  Classifying  Minerals,  including 
Ores,  by  means  of  the  Blowpipe,  and  by  Humid  Chemical  Analysis, 
based  on  Professor  von  Kobell's  Tables  for  the  Determination  of 
Minerals,  with  an  Introduction  to  Modern  Chemistry.  By  Henry 
Erni,  A.M.,  M.D.,  Professor  of  Chemistry.  Second  Edition,  rewritten, 
enlarged  and  improved.   i2mo.  ....  *>3  00 

FAIRBAIRN.— The  Principles  of  Mechanism  and  Machinery 
of  Transmission  ■ 
Comprising  the  Principles  of  Mechanism,  Wheels,  and  Pulleys, 
Strength  and  Proportions  of  Shafts,  Coupling  of  Shafts,  and  Engag- 
ing and  Disengaging  Gear.  By  Sir  William  Fairbairn,  Bart. 
C.  E.  Beautifully  illustrated  by  over  150  wood-cuts.  In  one 
volume,  i2mo   .........         $2.50 

FITCH.— Bessemer  Steel, 
Ores  and  Methods,  New  Facts  and  Statistics  Relating  to  the  Types 
of  Machinery  in  Use,  the  Methods  in  Vogue,  Cost  and  Class  of  Labor 
employed,  and  the  Character  and  Availability  of  the  Ores  utilized  in 
the  Manufacture  of  Bessemer  Steel  in  Europe  and  in  the  United  States ; 
together  with  opinions  and  excerpts  from  various  accepted  authorities. 
Compiled  and  arranged  by  Thomas  W.  Fitch.  8vo.         .         $3  00 

FLEMING. — Narrow  Gauge  Railways  in  America. 

A  Sketch  of  their  Rise,  Progress,  and  Success.  Valuable  Statistics 
as  to  Grades,  Curves,  Weight  of  Rail,  Locomotives,  Cars,  etc.  By 
Howard  Fleming.     Illustrated,  Svo.      .         .         .         .         $1   50 

FORSYTH.— Book   of   Designs  for   Headstones,    Mural,   and 
other  Monuments : 
Containing  78  Designs.     By  James  Forsyth.    With  an  Introduction 
by  Charles  Boutell,  M.  A.     4  to.,  cloth      .        .        .        ?5  00 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  13 

FRANKEL— HUTTER.— A  Practical  Treatise  on  the  Manu- 
facture of  Starch,  Glucose,  Starch-Sugar,  and  Dextrine  : 
Based  on  the  German  of  Ladislaus  Von  Wagner,  Professor  in  the 
Royal  Technical  High  School,  Buda-Pest,  Hungary,  and  other 
authorities.  By  Julius  Frankel,  Graduate  of  the  Polytechnic 
School  of  Hanover.  Edited  by  Robert  Hutter,  Chemist,  Practical 
Manufacturer  of  Starch-Sugar.  Illustrated  by  58  engravings,  cover- 
ing every  branch  of  the  subject,  including  examples  of  the  most 
Recent  and  Best  American  Machinery.     8vo.,  344  pp.       .         $3.50 

GEE.— The  Goldsmith's  Handbook  : 

Containing  full  instructions  for  the  Alloying  and  Working  of  Gold, 
including  the  Art  of  Alloying,  Melting,  Reducing,  Coloring,  Col- 
lecting, and  Refining ;  the  Processes  of  Manipulation,  Recovery  of 
Waste  ;  Chemical  and  Physical  Properties  of  Gold ;  with  a  New- 
System  of  Mixing  its  Alloys;  Solders,  Enamels,  and  other  Useful 
Rules  and  Recipes.     By  George  E.  Gee.     121110.    .         .         $1-75 

GEE. — The  Silversmith's  Handbook  : 

Containing  full  instructions  for  the  Alloying  and  Working  of  Silver, 
including  the  different  modes  of  Refining  and  Melting  the  Metal ;  its 
Solders;  the  Preparation  of  Imitation  Alloys;  Methods  of  Manipula- 
tion; Prevention  of  Waste ;  Instructions  for  Improving  and  Finishing 
the  Surface  of  the  Work;  together  with  other  Useful  Information  and 
Memoranda.     By  George  E.  Gee,  Jeweller.     Illustrated.     i2mo. 

#i-75 
GOTHIC  ALBUM  FOR  CABINET-MAKERS: 

Designs  for  Gothic  Furniture.    Twenty-three  plates.    Oblong     $2.00 

GREENWOOD.— Steel  and  Iron: 

Comprising  the  Practice  and  Theory  of  the  Several  Methods  Pur- 
sued in  their  Manufacture,  and  of  their  Treatment  in  the  Rolling- 
Mills,  the  Forge,  and  the  Foundry.  By  William  Henry  Green- 
wood, F.  C.  S.  Asso.  M.  I.  C.  E.,  M.  I.  M.  E.,  Associate  of  the  Royal 
School  of  Mines.    With  97  Diagrams,  536  pages.     121110.    .         $2.00 

GREGORY.— Mathematics  for  Practical  Men  : 

Adapted  to  the  Pursuits  of  Surveyors,  Architects,  Mechanics,  and 
Civil  Engineers.     By  Olinthus  Gregory.     8vo.,  plates  .         $3.00 

GRIER.— Rural  Hydraulics: 

A  Practical  Treatise  on  Rural  Household  WTater  Supply.  Giving  a 
full  description  of  Springs  and  Wells,  of  Pumps  and  Hydraulic  Ram, 
with  Instructions  in  Cistern  Building,  Laying  of  Pipes,  etc.  By  W. 
W.  Grier.     Illustrated  8vo 75 

GRIMSH AW.— Modern  Milling: 

Being  the  substance  of  two  addresses  delivered  by  request,  at  the 
Franklin  Institute,  Philadelphia,  January  19th  and  January  27th, 
1881.  By  Robert  Grimshaw,  Ph.  D.  Edited  from  the  Phono- 
graphic Reports.     With  28  Illustrations.     8vo.  .  .         $1.00 

GRIMSHAW.— Saws  : 

The  History,  Development,  Action,  Classification,  and  Comparison 
of  Saws  of  all  kinds.      With  Copious  Appendices.     Giving  the  details 


14  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

of  Manufacture,  Filing,  Setting,  Gumming,  etc.     Care   and   Use  of 
Saws;  Tables  of  Gauges;  Capacities  of  Saw-Mills;    List   of  Saw- 
Patents,  and  other  valuable  information.     By  Robert  Grimshaw. 
Second  and  greatly  enlarged  edition,  with  Supplement,  and  354  Illus- 
trations.    Quarto        ........         $4.00 

GRIMSHAW. — A  Supplement  to  Grimshaw  on  Saws: 

Containing  additional  practical  matter,  more  especially  relating  to  the 
Forms  of  Saw-Teeth,  for  special  material  and  conditions,  and  to  the 
Behavior  of  Saws  under  particular  conditions.  120  Illustrations.  By 
Robert  Grimshaw.     Quarto $2.00 

GRISWOLD. — Railroad  Engineer's  Pocket  Companion  for  the 
Field : 
Comprising  Rules  for  Calculating  Deflection  Distances  and  Angles, 
Tangential  Distances  and  Angles,  and  all  Necessary  Tables  for  En- 
gineers; also  the  Art  of  Levelling  from  Preliminary  Survey  to  the 
Construction  of  Railroads,  intended  Expressly  for  the  Young  En- 
gineer, together  with  Numerous  Valuable  Rules  and  Examples.  By 
\V.  Griswold.     121110.,  tucks '       $175 

GRUNER.— Studies  of  Blast  Furnace  Phenomena: 

By  M.  L.  Gruner,  President  of  the  General  Council  of  Mines  of 
France,  and  lately  Professor  of  Metallurgy  at  the  Ecole  des  Mines. 
Translated,  with  the  author's  sanction,  with  an  Appendix,  by  L.  D. 
B.  Gordon,  F.  R.  S.  E.,  F.  G.  S.     Svo.  .         .         .        #2.50 

GUETTIER.— Metallic  Alloys: 

Being  a  Practical  Guide  to  their  Chemical  and  Physical  Properties, 
their  Preparation,  Composition,  and  Uses.  Translated  from  the 
French  of  A.  Guettier,  Engineer  and  Director  of  Founderies, 
author  of  "  La  Fouderie  en  France,"  etc.,  etc.  By  A.  A.  Fesquet, 
Chemist  and  Engineer.      i2mo.  .....         $3.00 

HASERICK.— The  Secrets  of  the  Art  of  Dyeing  Wool,  Cotton, 
and  Linen, 
Including  Bleaching  and  Coloring  Wool  and  Cotton  Hosiery  and 
Random  Yarns.  A  Treatise  based  on  Economy  and  Practice.  By 
E.  C.  Haserick.  Illustrated  by  323  Dyed  Patterns  of  the  Yarns 
or  Fabrics.    8vo.         ........        $25.00 

HATS  AND  FELTING: 

A  Practical  Treatise  on  their  Manufacture.  By  a  Practical  Hatter. 
Illustrated  by  Drawings  of  Machinery,  etc.     Svo.        .         .         $1.25 

HENRY.— The  Early  and  Later  History  of  Petroleum  : 

With  Authentic  Facts  in  regard  to  its  Development  in  Western  Penn- 
sylvania. With  Sketches  of  the  Pioneer  and  Prominent  Operators, 
together  with  the  Refining  Capacity  of  the  United  States.  By  J.  T. 
Henry.     Illustrated  8vo. 

HOFFER. — A    Practical    Treatise    on    Caoutchouc   and   Gutta 

Percha, 

Comprising  the  Properties  of  the  Raw  Materials,  and  the  manner  of 

Mixing  and  Working  them;  with  the  Fabrication  of  Vulcanized  and 

Hard  Rubbers,  Caoutchouc  and  Gutta  Percha  Compositions,  Water 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  15 

proof  Substances,  Elastic  Tissues,  the  Utilization  of  Waste,  etc.,  etc. 
From  the  German  of  Raimund  Hoffer.  By  W.  T.  Brannt. 
Iliustrated  i2mo.        . #2.50 

HOFMANN.-A  Practical  Treatise  on  the  Manufacture  of 
Paper  in  all  its  Branches  : 
By  Carl  HoFMANN,  Late  Superintendent  of  Paper-Mills  in  Germany 
and  the  United  Slates ;  recently  Manager  of  the  "  Public  Ledger " 
Paper-Mills,  near  Elkton,  Maryland.  Illustrated  by  no  wood  en- 
gravings, and  five  large  Folding  Plates.  4to.,  cloth;  about  400 
pages ....       $50.00 

HUGHES. — American  Miller  and  Millwright's  Assistant: 
By  William  Carter  Hughes.     121110.     ....        $1.50 

HULME. — Worked  Examination  Questions  in  Plane  Geomet- 
rical Drawing  : 
For  the  Use  of  Candidates  for  the  Royal  Military  Academy,  Wool- 
wich;  the  Royal  Military  College,  Sandhurst ;  the  Indian  Civil  En- 
gineering College,  Cooper's  Hill  ;  Indian  Public  Works  and  Tele- 
graph Departments ;  Royal  Marine  Light  Infantry;  the  Oxford  and 
Cambridge  Local  Examinations,  etc.  By  F.  Edward  Hulme,  F.  L. 
S.,  F.  S.  A.,  Art-Master  Marlborough  College.  Illustrated  by  300 
examples.     Small  quarto  ......         $3-75 

JERV1S.— Railroad  Property: 

A  Treatise  on  the  Construction  and  Management  of  Railways; 
designed  to  afford  useful  knowledge,  in  the  popular  style,  to  the 
holders  of  this  class  of  property  ;  as  well  as  Railway  Managers,  Offi- 
cers, and  Agents.  By  John  B.  Jervis,  late  Civil  Engineer  of  the 
Hudson  River  Railroad,  Croton  Aqueduct,  etc.    i2mo.,  cloth       $2.00 

KEENE.-A  Hand-Book  of  Practical  Gauging: 

For  the  Use  of  Beginners,  to  which  is  added  a  Chapter  on  Distilla- 
tion,  describing  the  process  in  operation  at  the  Custom- House  for 
ascertaining  the  Strength  of  Wines.  By  James  B.  Keene,  of  H.  M. 
Custom^.     8vo.  ........         $1.25 

KELLEY.- Speeches,  Addresses,  and  Letters  on  Industrial  and 
Financial  Questions : 
By  Hon.  William  D.  Kelley,  M.  C.     544  pages,  8vo.  .         $3.00 

KELLOGG.— A  New  Monetary  System  : 

The  only  means  of  Securing   the   respective   Rights  of  Labor  and 
Properly,  and  of  Protecting  the  Public  from   Financial  Revulsions. 
By  Edward   Kellogg.     Revised  from  his  work  on  "Labor  and 
other    Capital."      With    numerou-    additions    from     his     m"nu<;cript. 
Edited  by  Mary  Kellogg  Putnam.     Fifth  edition.     To  which  is 
added  a   Biographical  Sketch  of  the  Author.     One  volume,   l2mo. 
Paper  cover        .........         $1.00 

Bound  in  cloth 1-5° 

KEMLO.— Watch-Repairer's  Hand-Book : 

Being  a  Complete  Guide  to  the  Young  Beginner,  in  Taking  Apart, 
Putting  Together,  and  Thoroughly  Cleaning  the  English  Lever  and 
other  Foreign  Watches,  and  all  American  Watches.  By  F.  Kemlo, 
Practical  Watchmaker.     With  Illustrations.      121110.  .         $1.25 


16  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

KENTISH.— A  Treatise  on  a  Box  of  Instruments, 

And  the  Slide  Rule;  with  the  Theory  of  Trigonometry  and  Loga. 
rithms,  including  Practical  Geometry,  Surveying,  Measuring  of  Tim- 
ber, Cask  and  Malt  Gauging,  Heights,  and  Distances.  By  Thomas 
Kentish.     In  one  volume.     i2mo.  ....         $1.25 

KERL, — The  Assayer's  Manual: 

An  Abridged  Treatise  on  the  Docimastic  Examination  of  Ores,  and 
Furnace  and  other  Artificial  Products.  By  Bruno  Kerl,  Professor 
in  the  Royal  School  of  Mines  ;  Member  of  the  Royal  Technical 
Commission  for  the  Industries,  and  of  the  Imperial  Patent-Office, 
Berlin.  Translated  from  the  German  by  William  T.  Brannt, 
Graduate  of  the  Royal  Agricultural  College  of  Eldena,  Prussia. 
Edited  by  William  H.  Wahl,  Ph.  D.,  Secretary  of  the  Franklin 
Institute,  Philadelphia.     Illustrated  by  sixty-five  engravings.    8vo. 

#3.00 

KINGZETT.— The    History,   Products,  and   Processes  of  the 

Alkali  Trade  : 

Including  the  most  Recent  Improvements.     By  Charles  Thomas 

Kingzett,  Consulting  Chemist.    With  23  illustrations.    8vo.       $2.50 

KINSLEY. — Self-Instructor  on  Lumber  Surveying: 

For  the  Use  of  Lumber  Manufacturers,  Surveyors,  and  Teachers. 
By  Charles  Kinsley,  Practical  Surveyor  and  Teacher  of  Surveying. 

l2mo.         ...  #2.00 

KIRK.— The  Founding  of  Metals  : 

A  Practical  Treatise  on  the  Melting  of  Iron,  with  a  Description  of  the 
Founding  of  Alloys;   also,  of  all  the  Metals  and  Mineral  Substance? 
used  in  the  Art  of  Founding.     Collected  from  original  sources.     By 
Edward  Kirk,  Practical   Foundryman  and   Chemist.     Illustrated. 
Third  edition.     8vo.  .......         $2.50 

KITTREDGE.— The    Compendium    of    Architectural    Sheet- 
Metal  Work : 
Profusely  Illustrated.    Embracing  Rules  and  Directions  for  Estimates, 
Items  of  Cost,  Nomenclature,  Tables  of  Brackets,  Modillions,  Den- 
tals, Trusses,  Stop-Blocks,  Frieze  Pieces,  etc.     Architect's  Specifica- 
tion, Tables  of  Tin-Roofing,  Galvanized  Iron,  etc.,  etc.     To  which  is 
added  the  Exemplar  of  Architectural  Sheet-Metal  Work,  containing 
details  of  the  Centennial  Buildings,  and  other  important  Sheet-Metal 
Work,  Designs  and  Prices  of  Architectural  Ornaments,  as  manufac- 
tured for  the  Trade  by  the  Kittredge  Cornice  and  Ornament  Com- 
pany, and  a  Catalogue  of  Cornices,  Window-Caps,  Mouldings,  etc.,  as 
manufactured   by   the   Kittredge   Cornice   and   Ornament   Company. 
The  whole  supplemented  by  a  full  Index  and  Table  of  Contents.    By 
A.  O.  Kittredge.    Svo.,  565  pages  ....        $5.00 

LANDRIN.— A  Treatise  on  Steel: 

Comprising  its  Theory,  Metallurgy,  Properties,  Practical  Working, 
and  Use.  By  M.  H.  C.  Landrin,  Jr.,  Civil  Engineer.  Translated 
from  the  French,  with  Notes,  by  A.  A.  Fesquet,  Chemist  and  En- 
gineer. With  an  Appendix  on  the  Bessemer  and  the  Martin  Pro- 
cesses for  Manufacturing  Steel,  from  the  Report  of  Abram  S.  Hewitt 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  17 

United  States  Commissioner  to  the  Universal  Exposition,  Paris,  1867. 
I2mo $3-°° 

LARDEN.-A  School  Course  on  Heat: 

By  W.  Larden,  M.  A.     321  pp.  i2mo $2.00 

LARDNER.— The  Steam-Engine: 

For  the  Use  of  Beginners.    By  Dr.  Lardner.    Illustrated.    i2mo. 

75 

LARKIN. — The  Practical  Brass  and  Iron  Founder's  Guide: 
A  Concise  Treatise  on  Brass  Founding,  Moulding,  the  Metals  and 
their  Alloys,  etc.;  to  which  are  added  Recent  Improvements  in  the 
Manufacture  of  Iron,  Steel  by  the  Bessemer  Process,  etc.,  etc.  By 
James  Larkin,  late  Conductor  of  the  Brass  Foundry  Department  in 
Reany,  Neafie  &  Co.'s  Penn  Works,  Philadelphia.  Fifth  edition, 
revised,  with  extensive  additions.      i2mo.  .         .  .         $2.25 

LEROUX. — A  Practical  Treatise  on  the  Manufacture  of 
Worsteds  and  Carded  Yarns  : 
Comprising  Practical  Mechanics,  with  Rules  and  Calculations  applied 
to  Spinning;  Sorting,  Cleaning,  and  Scouring  Wools;  the  English 
and  French  Methods  of  Combing,  Drawing,  and  Spinning  Worsteds, 
and  Manufacturing  Carded  Yarns.  Translated  from  the  French  of 
Charles  Leroux,  Mechanical  Engineer  and  Superintendent  of  a 
Spinning-Mill,  by  Horatio  Paine,  M.  D.,  and  A.  A.  Fesquet, 
Chemist  and  Engineer.  Illustrated  by  twelve  large  Plates.  To  which 
is  added  an  Appendix,  containing  Extracts  from  the  Reports  of  the 
International  Jury,  and  of  the  Artisans  selected  by  the  Committee 
appointed  by  the  Council  of  the  Society  of  Arts,  London,  on  Woolen 
and  Worsted  Machinery  and  Fabrics,  as  exhibited  in  the  Paris  Uni- 
versal Exposition,  1867.     Svo.  ....         $5-°° 

LEFFEL. — The  Construction  of  Mill-Dams: 

Comprising  also  the  Building  of  Race  and  Reservoir  Embankments 
and  Head-Gates,  the  Measurement  of  Streams,  Gauging  of  Water 
Supply,  etc.  By  James  Leffel  &  Co.  Illustrated  by  58  engravings. 
8vo #2.50 

LESLIE.— Complete  Cookery: 

Directions  for  Cookery  in  its  Various  Branches.  By  Miss  Leslie. 
Sixtieth  thousand.  Thoroughly  revised,  with  the  addition  of  New 
Receipts.     In  121110.,  cloth         ......         $l-.5° 

LIEBER.— Assayer's  Guide  : 

Or,  Practical  Directions  to  Assayers,  Miners,  and  Smelters,  for  the 
Tests  and  Assays,  by  Heat  and  by  Wet  Processes,  for  the  Ores  of  all 
the  principal  Metals,  of  Gold  and  Silver  Coins  and  Alloys,  and  of 
Coal,  etc.     By  Oscar  M.  Lieber.     121110.         .         .         .         $1.25 

LOVE. — The  Art  of  Dyeing,  Cleaning,  Scouring,  and  Finish- 
ing, on  the  Most  Approved  English  and  French  Methods : 
Being  Practical  Instructions  in  Dyeing  Silks,  Woolens,  and  Cottons, 
Feathers,  Chips,  Straw,  etc.  Scouring  and  Cleaning  Bed  and  Win- 
dow Curtains,  Carpets,  Rugs,  etc.  French  and  English  Cleaning, 
any  Color  or  Fabric  of  Silk,  Satin,  or  Damask.  By  Thomas  Love, 
a  Working  Dyer  and  Scourer.     Second  American  Edition,  to  which 


IS  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

are  added  General  Instructions  for  the  use  of  Aniline  Colors.     8vo. 

343  Pages #5-°° 

LUKIN.— Amongst  Machines: 

Embracing  Descriptions  of  the  various  Mechanical  Appliances  used 
in  the  Manufacture  of  Wood,  Metai,  and  other  Substances.     ]2mo. 

£i-75 

LUKIN.— The  Boy  Engineers: 

What  They  Did,  and  How  They  Did  It.     With  30  plates.     iSmo. 

31.75 
LUKIN.— The  Young  Mechanic  : 

Practical  Carpentry.  Containing  Directions  for  the  Use  of  all  kinds 
of  Tools,  and  for  Construction  of  Steam- Engines  and  Mechanical 
Models,  including  the  Art  of  Turning  in  Wood  and  Metal.  By  John 
Lukin,    Author   of   "The    Lathe    and    Its    Uses,':   e'.c.     Illustrated. 

I2IT.O.  .  .  #1-75 

MAIN  and  BROWN. — Questions  on  Subjects  Connected  with 

the  Marine  Steam-Engine : 

And    Examination    Paper.-.;    with    Hints    for    their    Solution.     By 

Thomas   J.  Main,  Professor  of  Mathematics,  Royal  Naval  College, 

and  Thomas  Brown,  Chief  Engineer,  R.  N.    i2mo.,  cloth  .        #1.50 

MAIN  and  BROWN. — The  Indicator  and  Dynamometer: 
With  their  Practical  Applications  to  the  Steam-Engine.     By  Thomas 
J.   Main,    M.   A.   F.  R.,   Ass't    S.    Professor    Royal   Naval   College, 
Portsmouth,  and  Thomas  Brown,  Assoc.  Inst.  C.  E.,  Chief  Engineer 
R.  N.,  attached  to  the  R.  N.  College.      Illustrated.     S\o.  .         §1.50 

MAIN  and  BROWN.— The  Marine  Steam-Engine. 

By  Thomas  J.  Main,  F.  R.  Ass't  S.  Mathematical  Professor  at  the 
Royal  Naval  College,  Portsmouth,  and  Thomas  Brown,  Assoc. 
Inst.  C.  E.,  Chief  Engineer  R.  N.  Attached  to  the  Royal  Naval 
College.     With  numerous  illustrations.     8vo.      .  .         .         $S-°° 

MARTIN.— Screw-Cutting  Tables,  for  the  Use  of  Mechanical 
Engineers  : 
Showing  the  Proper  Arrangement  of  Wheels  for  Cutting  the  Threads 
of  Screws  of  any  Required  Pitch ;  with  a  Table  for  Making  the  Uni- 
versal Gas-Pipe  Thread  and  Taps.  By  W.  A.  Martin,  Engineer. 
8vo. 50 

MICHELL. — Mine  Drainage: 

Being  a  Complete  and  Practical  Treatise  on  Direct-Acting  Under- 
ground Steam  Pumping  Machinery.  With  a  Description  of  a  large 
number  of  the  best  known  Engines,  their  General  Utility  and  the 
Special  Sphere  of  their  Action,  the  Mode  of  their  Application,  and 
their  Merits  compared  with  other  Pumping  Mnchinery.  By  STEPHEN 
MlCHELL.    Illustrated  by  137  engravings.    8vo.,  277  pages  .       $6.00 

MOLESWORTH.— Pocket-Book    of     Useful     Formulae     and 
Memoranda  for  Civil  and  Mechanical  Engineers. 
By  Guilford  L.  Molesworth,  Member  of  the  Institution  of  Civil 
Engineers,  Chief  Resident   Engineer  of  the   Ceylon  Railway.     Full- 
bound  in   Pocket-book  form       ....••         $1.00 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  19 


MOORE. — The  Universal  Assistant  and  the  Complete  Me- 
chanic : 
Containing  over  one  million  Industrial  Facts,  Calculations,  Receipts, 
Processes/Trades  Secrets,  Rules,  Business  Forms,  Legal  Items,  Etc., 
in  every  occupation,  from  the  Household  to  the  Manufactory.  By 
R.  Moore.     Illustrated  by  500  Engravings.      121110.  $2.50 

MORRIS. — Easy  Rules  for  the  Measurement  of  Earthworks  : 
By  means  of  the  Prismoidal  Formula.  Illustrated  with  Numerous 
Wood-Cuts,  Problems,  and  Examoles,  and  concluded  by  an  Exten- 
sive Table  for  finding  the  Solidity  in  cubic  yards  from  Mean  Areas. 
The  whole  being  adapted  for  convenient  use  by  Engineers,  Surveyors, 
Contractors,  and  others  needing  Correct  Measurements  of  Earthwork. 
By  Elwood  Morris,  C.  E.     8vo $i-5° 

MORTON. — The  System  of  Calculating  Diameter,  Circumfer- 
ence, Area,  and  Squaring  the  Circle: 
Together  with  Interest  and  Miscellaneous  Tables,  and  other  informa- 
tion.    By   James    Morton.      Second    Edition,  enlarged,  with  the 
Metric  System.     121110.      .         .         .         .         .         •         •         #1.00 

NAPIER.— Manual  of  Electro-Metallurgy: 

Including  the  Application  of  the  Art  to  Manufacturing  Processes. 
By  James  Napier.  Fourth  American,  from  the  Fourth  London 
edition,  revised  and  enlarged.      Illustrated  by  engravings.  8vo.  $1.50 

NAPIER. — A  System  of  Chemistry  Applied  to  Dyeing. 

By  James  Napier,  F.  C.  S.  A  New  and  Thoroughly  Revised  Edi- 
tion. Completely  brought  un  to  the  present  state  of  the  Science, 
including  the  Chemistry  of  Co«d  Tar  Colors,  by  A.  A.  FesqueT, 
Chemist  and  Engineer.  With  an  Appendix  on  Dyeing  and  Calico 
Printing,  as  shown  at  the  Universal  Exposition,  Paris,  1867.  Illus- 
trated. 8vo.  422  pages        .....-•         $5°° 

NEVILLE.— Hydraulic  Tables,  Coefficients,  and  Formulae,  for 
finding  the  Discharge  of  Water  from  Orifices,  Notches, 
Weirs,  Pipes,  and  Rivers  : 
Thud  Edition,  witlr  Additions,  consisting  of  New  Formulae  for  the 
Discharge  from  Tidal  and  Flood  Sluices  and  Siphons ;  general  infor- 
mation on  Rainfall,  Catchment-Basins,  Drainage,  Sewerage,  Water 
Supply  for  Towns  and  Mill  Power.  By  Iohn  Neville,  C.  E.  M.  R. 
I.  A. ;  Fellow  of  the  Royal  Geological  Society  of  Ireland.  Thick 
I2mo #3-5° 

NEWBERY.— Gleanings  from  Ornamental  Art  of  every 
style : 
Drawn  from  Examples  in  the  British,  South  Kensington,  Indian, 
Crystal  Palace,  and  other  Museums,  the  Exhibitions  of  1851  and 
1862,  and  the  best  English  and  Foreign  works.  In  a  series  of  100 
exquisitely  drawn  Plates,  containing  many  hundred  examples.  By 
Robert  Newbery.    4to.  ......      $12.50 

NICHOLLS.  —The  Theoretical  and  Practical  Boiler-Maker  and 
Engineer's  Reference  Book: 
Containing  a  variety  of  Useful  Information  for  Employers  of  Labor, 
Foremen  and  Working  Boiler-Makers,  Iron,  Copper,  and  Tinsmiths, 


2o         HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 


Draughtsmen,  Engineers,  the  General  Steam-using  Public,  and  for  the 
Use  of  Science  Schools  and  Classes.  By  SAMUEL  NlCHOLLS.  Illus- 
trated by  sixteen  plates,  i2mo.  .....         $2.50 

NICHOLSON.— A  Manual  of  the  Art  of  Bookbinding : 

Containing  full  instructions  in  the  different  Branches  of  Forwarding, 
Gilding,  and  Finishing.  Also,  the  Art  of  Marbling  Book-edges  and 
Paper.     By  James  B.  Nicholson.     Illustrated.  i2mo.,  cloth     #2.25 

NICOLLS.— The  Railway  Builder: 

A  Hand-Book  for  Estimating  the  Probable  Cost  of  American  Rail- 
way Construction  and  Equipment.  By  William  J.  NlCOLLS,  Civil 
Engineer.    Illustrated,  full  bound,  pocket-book  form  .  $2.00 

NORMANDY. — The  Commercial  Handbook  of  Chemical  An- 
alysis : 
Or  Practical  Instructions  for  the  Determination  of  the  Intrinsic  or 
Commercial  Value  of  Substances  used  in  Manufactures,  in  Trades, 
and  in  the  Arts.  By  A.  Normandy.  New  Edition,  Enlarged,  and 
to  a  great  extent  rewritten.  By  Henry  M.  Noad,  Ph.D.,  F.R.S., 
thick  i2mo $5.00 

NORRIS. — A  Handbook  for  Locomotive  Engineers  and  Ma- 
chinists: 
Comprising  the  Proportions  and  Calculations  for  Constructing  Loco- 
motives; Manner  of  Setting  Valves;  Tables  cf  Squares,  Cubes,  Areas, 
etc.,  etc.  By  Septimus  Norris,  M.  E.  New  edition.  Illustrated, 
l2mo. #1-50 

NORTH.— The  Practical  Assayer: 

Containing  Easy  Methods  for  the  Assay  of  the  Principal  Metals  and 
Alloys.  Principally  designed  for  explorers  and  those  interested  in 
Mines.     By  Oliver  North.     Illustrated.     i2mo.  .        $2.50 

NYSTROM. — A  New  Treatise  on  Elements  of  Mechanics  : 
Establishing  Strict  Precision  in  the   Meaning  of  Dynamical   Terms : 
accompanied  with  an  Appendix  on  Duodenal  Arithmetic  and   Me- 
trology.    By  JOHN  W.  Nystrom,  C.  E.     Illustrated.     8vo.        $2.00 

NYSTROM!— On  Technological  Education  and  the  Construc- 
tion of  Ships  and  Screw  Propellers : 
For  Naval   and  Marine  Engineers.     By   John  W.   Nystrom,  late 
Acting  Chief  Engineer,  U.  S.  N.     Second  edition,  revised,  with  addi- 
tional matter.     Illustrated  by  seven  engravings.      i2mo.     .  $1.50 

O'NEILL. — A  Dictionary  of  Dyeing  and  Calico  Printing: 

Containing  a  brief  account  of  all  the  Substances  and  Processes  in 
use  in  the  Art  of  Dyeing  and  Printing  Textile  Fabrics  ;  with  Practical 
Receipts  and  Scientific  Information.  By  Charles  O'Neill,  Analy- 
tical Chemist.  To  which  is  added  an  Essay  on  Coal  Tar  Colors  and 
their  application  to  Dyeing  and  Calico  Printing.  By  A.  A.  Ff.squet, 
Chemist  and  Engineer.  With  an  appendix  on  Dyeing  and  Calico 
Printing,  as  shown  at  the  Universal  Exposition,  Paris,  1867.  8vo., 
491  pages  .........         $5.00 

ORTON. — Underground  Treasures*. 

How  and  Where  to  Find  Them.  A  Key  for  the  Ready  Determination 
of  all   the  Useful   Minerals  within    the   United   States.     By  James 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  21 

ORTON,  A.M.,  Late  Professor  of  Natural  History  in  Vassar  College, 
N.  Y.;  Cor.  Mem.  of  the  Academy  of  Natural  Sciences,  Philadelphia, 
and  of  the  Lyceum  of  Natural  History,  New  York ;  author  of  the 
"  Andes  and  the  Amazon,"  etc.  A  New  Edition,  with  Additions. 
Illustrated  .........         $1.50 

OSBORN.— The  Metallurgy  of  Iron  and  Steel : 

Theoretical  and  Practical  in  all  its  Branches ;  with  special  reference 
to  American  Materials  and  Processes.  By  H.  S.  Osborn,  LL.  D., 
Professor  of  Mining  and  Metallurgy  in  Lafayette  College,  Easton, 
Pennsylvania.  Illustrated  by  numerous  large  folding  plates  and 
wood-engravings.     8vo.  ......         $25.00 

OVERMAN.— The  Manufacture  of  Steel : 

Containing  the  Practice  and  Principles  of  Working  and  Making  Steel. 
A  Handbook  for  Blacksmiths  and  Workers  in  Steel  and  Iron,  Wagon 
Makers,  Die  Sinkers,  Cutlers,  and  Manufacturers  of  Files  and  Hard- 
ware, of  Steel  and  Iron,  and  for  Men  of  Science  and  Art.  By 
Frederick  Overman,  Mining  Engineer,  Author  of  the  "  Manu- 
facture of  Iron,"  etc.  A  new,  enlarged,  and  revised  Edition.  By 
A.  A.  Fesquet,  Chemist  and  Engineer.     i2mo.         .         .         $1.50 

OVERMAN.— The  Moulder's  and  Founder's  Pocket  Guide  : 
A  Treatise  on  Moulding  and  Founding  in  Green-sand,  Dry-sand,  Loam, 
and  Cement;  the  Moulding  of  Machine  Frames,  Mill-gear,  Hollow- 
ware,  Ornaments,  Trinkets,  Bells,  and  Statues;  Description  of  Moulds 
for  Iron,  Bronze,  Brass,  and  other  Metals ;  Plaster  of  Paris,  Sulphur, 
Wax,  etc. ;  the  Construction  of  Melting  Furnaces,  the  Melting  and 
Founding  of  Metals  ;  the  Composition  of  Alloys  and  their  Nature, 
etc.,  etc.  By  Frederick  Overman,  M.  E.  A  new  Edition,  to 
which  is  added  a  Supplement  on  Statuary  and  Ornamental  Moulding, 
Ordnance,  Malleable  Iron  Castings,  etc.  By  A.  A.  Fesquet,  Chem- 
ist and  Engineer.     Illustrated  by  44  engravings.      i2mo.    .  #2.00 

PAINTER,  GILDER,  AND  VARNISHER'S  COMPANION: 
Containing  Rules  and  Regulations  in  everything  relating  to  the  Ar:S 
of  Painting,  Gilding,  Varnishing,  Glass-Staining,  Graining,  Marbling, 
Sign- Writing,  Gilding  on  Glass,  and  Coach  Painting  and  Varnishing; 
Tests  for  the  Deteciion  of  Adulterations  in  Oils,  Colors,  etc. ;  and  a 
Statement  of  the  Diseases  to  which  Painters  are  peculiarly  liable,  with 
the  Simplest  and  Best  Remedies.  Sixteenth  Edition.  Revised,  with 
an  Appendix.  Containing  Colors  and  Coloring — Theoretical  and 
Practical.  Comprising  descriptions  of  a  great  variety  of  Additional 
Pigments,  their  Qualities  and  Uses,  to  which  are  added,  Dryers,  and" 
Modes  and  Operations  of  Painting,  etc.  Together  with  Chevreul's 
Principles  of  Harmony  and  Contrast  of  Colors.    l2mo.     Cloth     $1.50 

PALLETT. — The  Miller's,  Millwright's,  and  Engineer's  Guide. 
By  Henry  Pallett.     Illustrated.     121110,        .         .         .         #3.00 

PEARSE. — A  Concise   History  of  the  Iron  Manufacture  of  the 
American   Colonies  up  to  the   Revolution,  and  of  Pennsyl- 
vania until  the  present  time. 
By  John  B.  Pearse.     Illustrated  i2mo.  .         .         .         52.00 


22  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

PERCY.— The  Manufacture  of  Russian  Sheet-Iron. 

By  John  Percy,  M.  D.,  F.  R.  S.,  Lecturer  on  Metallurgy  at  the 
Royal  School  of  Mines,  and  to  The  Advance  Class  of  Artillery 
Officers  at  the  Royal  Artillery  Institution,  Woolwich;  Author  of 
"  Metallurgy."  With  Illustrations.     Svo.,  paper        .  .  50  cts, 

PERKINS.— Gas  and  Ventilation  : 

Practical  Treatise  on  Gas  and  Ventilation.  With  Special  Relation 
to  Illuminating,  Heating,  and  Cooking  by  Gas.  Including  Scientific 
Helps  to  Engineer-students  and  others.  With  Illustrated  Diagrams. 
By  E.  E.  Perkins.     i2mo.,  cloth $1.25 

PERKINS  AND  STOWE.-A  New  Guide  to  the  Sheet-iron 
and  Boiler  Plate  Roller  : 
Containing  a  Series  of  Tables  showing  the  Weight  of  Slabs  and  Piles 
to  Produce  Boiler  Plates,  and  of  the  Weight  of  Piles  and  the  Sizes  of 
Bars  to  produce  Sheet-iron ;  the  Thickness  of  the  Bar  Gauge 
in  decimals;  the  Weight  per  foot,  and  the  Thickness  on  the  Bar  or 
Wire  Gauge  of  the  fractional  parts  of  an  inch;  the  Weight  per 
sheet,  and  the  Thickness  on  the  Wire  Gauge  of  Sheet-iron  of  various 
dimensions  to  weigh  112  lbs.  per  bundle;  and  the  conversion  of 
Short  Weight  into  Long  Weight,  and  Long  Weight  into  Short. 
Estimated  and  collected  by  G.  H.  Perkins  and  J.  G.  Stowe.  $2.50 

POWELL— CHANCE— HARRIS.— The    Principles  of   Glass 

Making. 

By  Harry  J.  Powell,  B.  A.  Together  with  Treatises  on  Crown  and 

Sheet  Glass;  by  Henry  Chance,  M.  A.     And  Plate  Glass,  by  H. 

G.  Harris,  Asso.  M.  Inst.  C.  E.     Illustrated  i8mo.  .         $1.50 

PROTEAUX.— Practical  Guide  for  the  Manufacture  of  Paper 
and  Boards. 
By  A.  Proteaux.     From  the  French,  by  Horatio  Paine,  A.  B., 
M.  D.     To  which  is  added  the   Manufacture  of  Paper  from  Wood, 
by  Henry  T.  Brown.     Illustrated  by  six  plates.    Svo. 

PROCTOR.— A  Pocket-Book  of  Useful  Tables  and  Formulae 
for  Marine  Engineers. 
By    Frank    Proctor.      Second    Edition,    Revised   and    Enlarged. 
Full  bound  pocket-book  form     ......         $1.50 

REGNAULT—  Elements  of  Chemistry. 

By  M.  V.  Regnault.  Translated  from  the  French  by  T.  Forrest 
Betton,  M.  D.,  and  edited,  with  Notes,  by  James  C.  Booth,  Melter 
and  Refiner  U.  S.  Mint,  and  William  L.  Faber,  Metallurgist  and 
Mining  Engineer.  Illustrated  by  nearly  700  wood  engravings.  Com- 
prising nearly  1,500  pages.    In  two  volumes,  8vo.,  cloth     .         $7-50 

RIFFAULT,  VERGNAUD,  and  TOUSSAINT.— A  Practical 
Treatise  on  the  Manufacture  of  Colors  for  Painting : 
Comprising  the  Origin,  Definition,  and  Classification  of  Colors  ;  the 
Treatment  of  the  Raw  Materials;  the  best  Formula?  ami  the  Newest 
Processes  for  the  Preparation  of  every  description  of  Pigment,  and 
the  Necessary  Apparatus  and  Directions  for  its  Use;  Dryers;  the 
Testing,  Application,  and  Qualities  of  Paints,  etc.,  etc.  By  MM. 
Riffault,  Vergnauo,  and  Toussaint.     Revised  and  Edited  by  M. 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  23 

F.  Malepeyre.  Translated  from  the  French,  by  A.  A.  Fesquet, 
Chemist  and  Engineer.  Illustrated  by  Eighty  engravings.  In  one 
vol.,  8vo.,  659  pages  .....••'    $7-5° 

ROPER.— A  Catechism  of  High-Pressure,  or  Non-Condensing 
Steam-Engines  : 
Including  ihe  Modelling,  Constructing,  and  Management  of  Steam- 
Engines  and  Steam  Boilers.  With  valuable  illustrations.  By  Ste- 
phen Roper,  Engineer.  Sixteenth  edition,  revised  and  enlarged. 
iSmo.,  tucks,  gilt  edge $2.00 

ROPER.— Engineer's  Handy-Book: 

Containing  a  full  Explanation  of  the  Steam-Engine  Indicator,  and  its 
Use  and  Advantages  to  Engineers  and  Steam  Users.  With  Formulae 
for  Estimating  the  Power  of  all  Classes  of  Steam-Engines;  also, 
Facts,  Figures,  Questions,  and  Tables  for  Engineers  who  wish  to 
qualify  themselves  for  the  United  States  Navy,  the  Revenue  Service, 
the  Mercantile  Marine,  or  to  take  charge  of  the  Better  Class  of  Sta- 
tionary Steam-Engines.  Sixth  edition.  i6mo..  690  pages,  tucks, 
gilt  edge .         #3-5<> 

ROPER. — Hand-Book  of  Land  and  Marine  Engines  : 

Including  the  Modelling,  Construction,  Running,  and  Management 
of  Land  and  Marine  Engines  and  Boilers.  With  illustrations.  By 
Stephen  Roper,  Engineer.    Sixth  edition.     i2mo.,  tveks,  gilt  edge. 

ROPER.— Hand-Book  of  the  Locomotive  : 

Including  the  Construction  of  Engines  and  Boilers,  and  the  Construc- 
tion, Management,  and  Running  of  Locomotives.  By  Stephen 
Roper.     Eleventh  edition.      iSmo.,  tucks,  gilt  edge  .         $2.50 

ROPER. — Hand-Book  of  Modern  Steam  Fire-Engines. 

With  illustrations.  By  Stephen  Roper,  Engineer.  Fourth  edition, 
l2mo.,  tucks,  gilt  edge        .  .  .  .  .  .  .  $3. 50 

ROPER. — Questions  and  Answers  for  Engineers. 

This  little  book  contains  all  the  Questions  that  Engineers  will  be 
asked  when  undergoing  an  Examination  for  the  purpose  of  procuring 
Licenses,  and  they  are  so  plain  that  any  Engineer  or  Fireman  of  or- 
dinary intelligence  may  commit  them  to  memory  in  a  short  time.  By 
Stephen  Roper,  Engineer.     Third  edition        .         .         .         $3-00 

ROPER. — Use  and  Abuse  of  the  Steam  Boiler. 
By  Stephen   Roper,  Engineer.     Eighth  edition,  with   illustrations. 
iSmo.,  tucks,  gilt  edge $2.00 

ROSE. — The  Complete  Practical  Machinist: 

Embracing  Lathe  Work,  Vise  Work,  Drills  and  Drilling,  Taps  and 
Dies,  Hardening  and  Tempering,  the  Making  and  Use  of  Tools, 
Tool  Grinding,  Marking  out  Work,  etc.  By  Joshua  Rose.  Illus- 
trated by  356  engravings.  Thirteenth  edition,  thoroughly  revised 
and  in  great  part  rewritten.     In  one  vol.,  l2mo.,  439  pages        $2.50 

ROSE.— Mechanical  Drawing  Self- Taught: 

Comprising  Instructions  in  the  Selection  and  Preparation  of  Drawing 
Instruments,  Elementary  Instruction  in  Practical  Mechanical  Draw- 


?4  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 


ing>  together  with  Examples  in  Simple  Geometry  and  Elementary 
Mechanism,  including  Screw  Threads,  Gear  Wheels,  Mechanical  Mo- 
tions, Engines  and  Boilers.  By  Joshua  Rose,  M.  E.,  Author  of 
"  The  Complete  Practical  Machinist,"  "  The  Pattern-maker's  Assist- 
ant," "  The  Slide-valve."     Illustrated  by  330  engravings.     8vo.,  313 

PaSes $4.00 

ROSE.— The  Slide-Valve  Practically  Explained : 

Embracing  simple  and  complete  Practical  Demonstrations  of  the 
operation  of  each  element  in  a  Slide-valve  Movement,  and  illustrating 
the  effects  of  Variations  in  their  Proportions  by  examples  carefully 
selected  from  the  most  recent  and  successful  practice.  By  Joshua 
Rose,  M.  E.,  Author  of  "  The  Complete  Practical  Machinist,"  "  The 
Pattern-maker's  Assistant,"  etc.  Illustrated  by  35  engravings  #1.00 
ROSS.— The  Blowpipe  in  Chemistry,  Mineralogy  and  Geology : 
Containing  all  Known  Methods  of  Anhydrous  Analysis,  many  Work- 
ing Examples,  and  Instructions  for  Making  Apparatus.  By  Lieut  - 
Colonel  W.  A.  Ross,  R.  A.  F.,  G.  S.     With   120  Illustrations. 

I2m° $1.50 

SHAW. — Civil  Architecture  : 

Being  a  Complete  Theoretical  and  Practical  System  of  Building,  con- 
taining the  Fundamental  Principles  of  the  Art.     By  Edward  Shaw, 
Architect.     To  which  is  added  a  Treatise  on  Gothic  Architecture,  etc. 
By  Thomas  W.  Silloway  and  George  M.  Harding,  Architects. 
The  whole  illustrated  by  102  quarto  plates  finely  engraved  on  copper. 
Eleventh  edition.     4to.       .......       $10.00 

SHUNK. — A  Practical  Treatise  on  Railway  Curves  and  Loca- 
tion, for  Young  Engineers. 
By  William  F.  Shunk,  Civil  Engineer.    i2mo.    Full  bound  pocket- 
book  form $2.00 

SLATER.— The  Manual  of  Colors  and  Dye  Wares. 

By  J.  W.  Slater.     i2mo $3.7  ; 

SLOAN. — American  Houses: 

A  variety  of  Original  Designs  for  Rural  Buildings.  Illustrated  by 
twenty-six  colored  Engravings,  with  Descriptive  References.  By 
Samuel  Sloan,  Architect,  author  of  the  "  Model  Architect,"  etc. 

etc.     8vo. $1.50 

SLOAN. — Homestead  Architecture : 

Containing  Forty  Designs  for  Villas,  Cottages,  and  Farm-houses,  with 
Essays  on  Style,  Construction,  Landscape  Gardening,  Furniture,  etc., 
etc.     Illustrated  by  upwards  of  200  engravings.     By  Samuel  Sloan, 

Architect.     8vo. .         $3.50 

SMEATON.— Builder's  Pocket-Companion : 

Containing  the  Elements  of  Building,  Surveying,  and  Architecture  ; 
with  Practical  Rules  and  Instructions  connected  with  the  subject.    By 
A.  C.  Smeaton,  Civil  Engineer,  etc.    i2mo.      .         .         .         $1.50 
SMITH.— A  Manual  of  Political  Economy. 

By  E.  Peshi.ne  Smith.  A  new  Edition,  to  which  is  added  a  full 
Index.     i2mo.  ........         $1-2$ 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  25 


SMITH.— Parks  and  Pleasure-Grounds: 

Or  Practical  Notes  011  Country  Residences,  Villas,  Public  Parks,  and 
Gardens.  By  Charles  H.  J.  Smith,  Landscape  Gardener  and 
Garden  Architect,  etc.,  etc.      i2mo.  ....         $2.00 

SMITH.— The  Dyer's  Instructor: 

Comprising  Practical  Instructions  in  the  Art  of  Dyeing  Sdk,  Cotton, 
Wool,  and  Worsted,  and  Woolen  Goods;  containing  nearly  800 
Receipts.  To  which  is  added  a  Treatise  on  the  Art  of  Padding ;  and 
the  Printing  of  Silk  Warps,  Skeins,  and  Handkerchiefs,  and  the 
various  Mordants  and  Colors  for  the  different  styles  of  such  work. 
By  David  Smith,  Pattern  Dyer.     i2mo.  .         .         .         $3-°° 

SMYTH.— A  Rudimentary  Treatise  on  Coal  and  Coal-Mining. 
By  Warrington  W.  Smyth,  M.  A.,  F.  R.  G.,  President  R.  G.  S. 
of  Cornwall.     Fifth  edition,  revised  and  corrected.     With  numer- 
ous illustrations.     i2mo.  $ 1-75 

SNIVELY. A  Treatise  on  the  Manufacture  of  Perfumes  and 

Kindred  Toilet  Articles. 
By  John  H.  Snively,  Phr.  D.,  Professor  of  Analytical  Chemistry  in 
the  Tennessee  College  of  Pharmacy.     8vo.        .         .         .         $3-°° 

SNIVELY.— Tables  for  Systematic  Qualitative  Chemical  Anal- 
ysis. 
By  John  H.  Snively,  Phr.  D.     8vo $100 

SNIVELY.— The  Elements  of  Systematic  Qualitative  Chemical 

Analysis  : 
A  Hand-book  for  Beginners.    By  John  H.  Snively,  Phr.  D.    i6mo. 

$2.00 
STEWART.— The  American  System  : 

Speeches  on  the  Tariff  Question,  and  on  Internal  Improvements, 
principally  delivered  in  the  House  of  Representatives  of  the  United 
States.  By  Andrew  Stewart,  late  M.  C.  from  Pennsylvania. 
With  a  Portrait,  and  a  Biographical  Sketch.  8vo.  .  .  $3.00 
STOKES. — The  Cabinet-Maker  and  Upholsterer's  Companion  : 
Comprising  the  Art  of  Drawing,  as  applicable  to  Cabinet  Work; 
Veneering,  Inlaying,  and  Buhl- Work ;  the  Art  of  Dyeing  and  Stain- 
ing Wood,  Ivory,  Bone,  Tortoise-Shell,  etc.  Directions  for  Lacker- 
ing, Japanning,  and  Varnishing;  to  make  French  Polish,  Glues, 
Cements,  and  Compositions;  with  numerous  Receipts,  useful  to  work- 
men generally.  By  J.  Stokes.  Illustrated.  A  New  Edition,  with 
an  Appendix  upon  French  Polishing,  Staining,  Imitating,  Varnishing, 

etc.,  et<j.    121110 $i-25 

STRENGTH  AND  OTHER  PROPERTIES  OF  METALS: 
Reports  of  Experiments  on  the  Strength  and  other  Properties  of 
Metals  for  Cannon.  With  a  Description  of  the  Machines  for  Testing 
Metals,  and  of  the  Classification  of  Cannon  in  service.  By  Officers 
of  the  Ordnance  Department,  U.  S.  Army.  By  authority  of  the  Secre- 
tary of  War.  Illustrated  by  25  large  steel  plates.  Quarto.  #10.00 
SULLIVAN.— Protection  to  Native  Industry. 

By  Sir  Edward  Sullivan,  Baronet,  author  of  "  Ten  Chapters  on 
Social  Reforms."     8vo $1-5° 


26         HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

SYME. — Outlines  of  an  Industrial  Science. 

By  David  Syme.     i2mo.  ......         $2.00 

TABLES      SHOWING      THE     WEIGHT      OF      ROUND, 
SQUARE,  AND  FLAT  BAR  IRON,  STEEL,  ETC., 
By  Measurement.      Clolh  ......  63 

TAYLOR.— Statistics  of  Coal: 

Including  Mineral  Bituminous  Substances  employed  in  Arts  and 
Manufactures;  with  their  Geographical,  Geological,  and  Commercial 
Distribution  and  Amount  of  Production  and  Consumption  on  the 
American  Continent.  With  Incidental  Statistics  of  the  Iron  Manu- 
facture. By  R.  C.  Taylor.  Second  edition,  revised  by  S.  S.  Halde- 
man.  Illustrated  by  five  Maps  and  many  wood  engravings.  8vo., 
cloth .       $10.00 

TEMPLETON. — The  Practical  Examinator  on  Steam  and  the 
Steam  -  Engine : 
With  Instructive  References  relative  thereto,  arranged  for  the  Use  of 
Engineers,   Students,  and  others.     By  William  Templeton,  En- 
gineer.    i2mo.  .         .         .         .         •         •         .         .         $1.25 

THAUSING.— The  Theory  and  Practice  of  the  Preparation  of 
Malt  and  the  Fabrication  of  Beer: 
With  especial  reference  to  the  Vienna  Process  of  Brewing.  Elab- 
orated from  personal  experience  by  Julius  E.  Thausing,  Professor 
at  the  School  for  Brewers,  and  at  the  Agricultural  Institute,  Modling, 
near  Vienna.  Translated  from  the  German  by  William  T.  Brannt. 
Thoroughly  and  elaborately  edited,  with  much  American  matter,  and 
according  to  the  latest  and  most  Scientific  Practice,  by  A.  Schwarz 
and  Dr.  A.  H.  Bauer.  Illustrated  by  140  Engravings.  8vo.,  815 
pages $10.00 

THOMAS.— The  Modern  Practice  of  Photography: 

By  R.  W.  Thomas,  F.  C.  S.    8vo.  ...  75 

THOMPSON.— Political  Economy.     With  Especial  Reference 
to  the  Industrial  History  of  Nations  : 
By  Robert  E.  Thompson,  M.  A.,  Professor  of  Social  Science  in  the 
University  of  Pennsylvania.      l2mo.  ....         $1.50 

THOMSON.— Freight  Charges  Calculator: 

By  Andrew  Thomson,  Freight  Agent.     24mo.         .         .        #1.25 

TURNER'S  (THE)   COMPANION: 

Containing  Instructions  in  Concentric,  Elliptic,  and  Eccentric  Turn^ 
i'.ig;  also  various  Plates  of  Chucks,  Tools,  and  Instruments;  and 
Directions  for  using  the  Eccentric  Cutter,  Drill,  Vertical  Cutter,  and 
Circular  Rest;  with  Patterns  and  Instructions  for  working  them. 
i2mo $1.25 

TURNING  :    Specimens  of   Fancy  Turning   Executed  on  the 

Hand  or  Foot-Lathe : 

With  Geometric,  Oval,  and  Eccentric  Chucks,  and  Elliptical  Cutting 

Frame.     By  an  Amateur.      Illustrated   by  30  exquisite  Photographs. 

4to. $3.00 

URBIN— BRULL.— A  Practical  Guide  for  Puddling  Iron  and 
Steel. 
By  Ed.  Urwn,  Engineer  of  Arts  and  Manufactures.     A  Prize  Essay, 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  27 

read  before  the  Association  of  Engineers,  Graduate  of  the  School  of 
Mines,  of  Liege,  Belgium,  at  the  Meeting  of  1865-6.  To  which  is 
added  A  Comparison  of  the  Resisting  Properties  of  Iron  and 
Steel.  By  A.  Brull.  Translated  from  the  French  by  A.  A.  Fes- 
QUET,  Chemist  and  Engineer.     8vo.  .  .  .  .         $1.00 

VAILE. — Galvanized-Iron  Cornice-Worker's  Manual: 

Containing  Instructions  in  Laying  out  the  Different  Mitres,  and 
Making  Patterns  for  all  kinds  of  Plain  and  Circular  Work.  Also, 
Tables  of  Weights,  Areas  and  Circumferences  of  Circles,  and  other 
Matter  calculated  to  Benefit  the  Trade.  By  Charles  A.  Vaile. 
Illustrated  by  twenty-one  plates.,    4to #5.00 

VILLE. — On  Artificial  Manures  : 

Their  Chemical  Selection  and  Scientific  Application  to  Agriculture. 
A  series  of  Lectures  given  at  the  Experimental  Farm  at  Vincennes, 
during  1S67  and  1874-75.  By  M.  Georges  Ville.  Translated  and 
Edited  by  WILLIAM  Crookes,  F.  R.  S.  Illustrated  by  thirty-one 
engravings.    8vo.,  450  pages      ......         $6.00 

VILLE.— The  School  of  Chemical  Manures  : 

Or,  Elementary  Principles  in  the  Use  of  Fertilizing  Agents.  From 
the  French  of  M.  Geo.  Ville,  by  A.  A.  Fesquet,  Chemist  and  En- 
gineer.    With  Illustrations.      i2mo.  ....  $1.25 

VOGDES.— The  Architect's  and  Builder's  Pocket-Companion 
and  Price-Book  : 
Consisting  of  a  Short  but  Comprehensive  Epitome  of  Decimals,  Duo- 
decimals, Geometry  and  Mensuration;  with  Tables  of  United  States 
Measures,  Sizes,  Weights,  Strengths,  etc.,  of  Iron,  Wood,  Stone, 
Brick,  Cement  and  Concretes,  Quantities  of  Materials  in  given  Sizes 
and  Dimensions  of  Wood,  Brick  and  Stone;  and  full  and  complete 
Bills  of  Prices  for  Carpenter's  Work  and  Painting ;  also,  Rules  for 
Computing  and  Valuing  Brick  and  Brick  Work,  Stone  Work,  Paint- 
ing, Plastering,  with  a  Vocabulary  of  Technical  Terms,  etc.  By 
Frank  W.  Vogdes,  Architect,  Indianapolis,  Ind.  Enlarged,  revised, 
and  corrected.     In  one  volume,  368  pages,  full-bound,  pocket-book 

form,  gilt  edges  .  .  • $2.00 

Cloth         .         .  1.50 

WAHL. — Galvanoplastic  Manipulations  : 

A  Practical  Guide  tor  the  Gold  and  Silver  Electroplater  and  the  Gal- 
vanoplastic Operator.  Comprising  the  Electro-Deposition  of  all 
Metals  by  means  of  the  Battery  and  the  Dynamo-Electric   Machine, 

'  as  well  as  the  most  approved  Processes  of  Deposition  by  Simple  Im- 
mersion, with  Descriptions  of  Apparatus,  Chemical  Products  employed 
in  the  Art,  etc.     Based  largely  on  the  "  Manipulations  Hydroplas- 
tiques"  of  Alfred  Roseleur.     By  William  H.  Wahl,  Ph.  D. 
(Ileid),  Secretary  of  the  Franklin  Institute.     Illustrated  by  189  en- 
gravings.    8vo.,  656  pages        ......         #7.50 

WALTON. — Coal-Mining  Described  and  Illustrated: 

By  Thomas  H.  Walton,  Mining  Engineer.  Illustrated  by  24  large 
and  elaborate  Plates,  after  Actual  Workings  and  Apparatus.  $5.00 


28  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

WARE.— The  Sugar  Beet. 

Including  a  History  of  the  Beet  Sugar  Industry  in  Europe,  Varieties 
of  the  Sugar  Beet,  Examination,  Soils,  Tillage,  Seeds  and  Sowing, 
Yield  and  Cost  of  Cultivation,  Harvesting,  Transportation,  Conserva- 
tion, Feeding  Qualities  of  the  Beet  and  of  the  Pulp,  etc.  By  Lewis 
S.  Ware,  C.  E.,  M.  E.     Illustrated  by  ninety  engravings.     8vo. 

$4.00 

WARN.— The  Sheet-Metal  Worker's  Instructor: 
For  Zinc,  Sheet-Iron,  Copper,  and  Tin-Plate  Workers,  etc.  Contain- 
inc  a  selection  of  Geometrical  Problems ;  also,  Practical  and  Simple 
Rules  for  Describing  the  various  Patterns  required  in  the  different 
branches  of  the  above  Trades.  By  Reuben  H.  Warn,  Practical 
Tin-Plate  Worker.  To  which  is  added  an  Appendix,  containing 
Instructions  for  Boiler-Making,  Mensuration  of  Surfaces  and  Solids, 
Rules  for  Calculating  the  Weights  of  different  Figures  of  Iron  and 
Steel,  Tables  of  the  Weights  of  Iron,  Steel,  etc.  Illustrated  by  thirty- 
two  Plates  and  thirty-seven  Wood  Engravings.     8vo.  .         $3.00 

WARNER. — New  Theorems,  Tables,  and  Diagrams,  for  the 
Computation  of  Earth-work : 
Designed  for  the  use  of  Engineers  in  Preliminary  and  Final  Estimates, 
of  Students  in  Engineering,  and  of  Contractors  and  other  non-profes- 
sional Computers.  In  two  parts,  with  an  Appendix.  Part  I.  A  Prac- 
tical Treatise;  Part  II.  A  Theoretical  Treatise,  and  the  Appendix. 
Containing  Notes  to  the  Rules  and  Examples  of  Part  I. ;  Explana- 
tions of  the  Construction  of  Scales,  Tables,  and  Diagrams,  and  a 
Treatise  upon  Equivalent  Square  Bases  and  Equivalent  Level  Heights. 
The  whole  illustrated  by  numerous  original  engravings,  comprising 
explanatory  cuts  for  Definitions  and  Problems,  Stereometric  Scales 
and  Diagrams,  and  a  series  of  Lithographic  Drawings  from  Models  : 
Showing  all  the  Combinations  of  Solid  Forms  which  occur  in  Railroad 
Excavations  and  Embankments.  By  John  Warner,  A.  M.,  Mining 
and  Mechanical  Engineer.  Illustrated  by  14  Plates.  A  new,  revised 
and  improved  edition.     8vo.      ......         $4.00 

WATSON.— A  Manual  of  the  Hand-Lathe  : 

Comprising  Concise  Directions  for  Working  Metals  of  all  kinds, 
Ivory,  Bone  and  Precious  Woods ;  Dyeing,  Coloring,  and  French 
Polishing;  Inlaying  by  Veneers,  and  various  methods  practised  to 
produce  Elaborate  work  with  Dispatch,  and  at  Small  Expense.  By 
Egbert  P.  Watson,  Author  of  "  The  Modern  Practice  of  American 
Machinists  and  Engineers."     Illustrated  by  78  engravings.  $1.50 

WATSON. — The  Modern  Practice  of  American  Machinists  and 
Engineers  : 
Including  the  Construction,  Application,  and  Use  of  Drills,  Lathe 
Tools,  Cutters  for  Boring  Cylinders,  and  Hollow-work  generally ,  with 
the  most  Economical  Speed  for  the  same ;  the  Results  verified  by 
Actual  Practice  at  the  Lathe,  the  Vise,  and  on  the  Floor.     Together 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  20 

with  Workshop  Management,  Economy  of  Manufacture,  the  Steam- 
Engine,  Boilers,  Gears,  Belting,  etc.,  etc.  By  Egbert  P.  Watson. 
Illustrated  by  eighty-six  engravings.     i2mo.        .  .  .         $2.50 

WATSON.— The  theory  and  Practice  of  the  Art  of  Weaving 
by  Hand  and  Power  : 
With  Calculations  and  Tables  for  the  Use  of  those  connected  with  the 
Trade.  By  John  Watson,  Manufacturer  and  Practical  Machine- 
Maker.  Illustrated  by  large  Drawings  of  the  best  Power  Looms. 
8v0-  ..•;.• #7.50 

WATT.--The  Art  of  Soap  Making : 

A  Practical  Hand-book  of  the  Manufacture  of  Hard  and  Soft  Soaps, 
Toilet  Soaps,  etc.,  including  many  New  Processes,  and  a  Chapter  on 
the  Recovery  of  Glycerine  from  Waste  Leys.  By  Alexander 
Watt.    111.     i2mo. #3.00 

WEATHERLY.— Treatise  on  the  Art  of  Boiling  Sugar,  Crys- 
tallizing, Lozenge-making,  Comfits,  Gum  Goods, 

And  other  processes  for  Confectionery,  etc.,  in  which  are  explained, 
in  an  easy  and  familiar  manner,  the  various  Methods  of  Manufactur- 
ing every  Description  of  Raw  and  Refined  Sugar  Goods,  as  sold  by 
Confectioners  and  others.     121110.       .....         #1.50 

WEDDING.— Elements  of  the  Metallurgy  of  Iron. 

By  Dr.  Hermann  Wedding,  Royal  Privy  Counsellor  of  Mines,  Ber- 
lin, Prussia.  Translated  from  the  second  revised  and  rewritten  Ger- 
man edition.  By  William  T.  Brannt,  Graduate  of  the  Royal  Ag- 
ricultural College  at  Eldena,  Prussia.  Edited  by  William  H. 
Wahl,  Ph.  D.,  Secretary  of  the  Franklin  Institute,  Philadelphia. 
Illustrated  by  about  250  engravings.  8vo.,  about  500  pages  {In prep- 
aration.} ......... 

WEINHOLD.— Introduction  to  Experimental  Physics,  Theo- 
retical and  Practical. 
Including  directions  for  Constructing  Physical  Apparatus  and  for 
Making  Experiments.  By  Adolf  F.  Weinhold,  Professor  in  the 
Royal  Technical  School  at  Chemnitz.  Translated  and  edited,  with 
the  author's  sanction,  by  Benjamin  Loewy,  F.  R.  A.  S.,  with  a 
preface,  by  G.  C.  Foster,  F.  R.  S.  Illustrated  by  three  colored  plates 
and  404  wood-cuts.     8vo.,  848  pages  ....         #6.00 

WIGHTWICK.— Hints  to  Young  Architects: 

Comprising  Advice  to  those  who,  while  yet  at  school,  are  destined 
to  the  Profession;  to  such  as,  having  passed  their  pupilage,  are  about 
to  travel ;  and  to  those  who,  having  completed  their  education,  are 
about  to  practise.  Together  with  a  Model  Specification  involving  a 
great  variety  of  instructive  and  suggestive  matter.  By  Georgk 
Wightwick,  Architect.  A  new  edition,  revised  and  considerably 
enlarged;  comprising  Treatises  on  the  Principles  of  Construction 
and  Design.  By  G.  Huskisson  Guillaume,  Architect.  Numerous 
Illustrations.     One  vol.  121110.'  ......  $2.oa 

WILL. — Tables  of  Qualitative  Chemical  Analysis. 
With  an  Introductory  Chapter  on  the  Course  of  Analysis.     By  Pro- 
fessor  Heinrich  Will,  of  Giessen,  Germany.     Third   American, 


jo  HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE. 

from  the  eleventh  German  edition.  Edited  by  Charles  F.  Himks, 
Ph.  D.,  Professor  of  Natural  Science,  Dickinson  College,  Carlisle,  Pa. 

8vo.  .  $1.50 

WILLIAMS.— On  Heat  and  Steam  : 

Embracing  New  Views  of  Vaporization,  Condensation,  and  Explo- 
sion.    By  Charles  Wye  Williams,  A.  I.  C.  E.     Illustrated  8vo. 

#3  5° 
WILSON. — A  Treatise  on  Steam  Boilers  : 

Their  Strength,  Construction,  and  Economical  Working.  By  Robert 
Wilson.     Illustrated  i2mo $2.50 

WILSON.— Cotton  Carder's  Companion: 

In  which  is  given  a  description  of  the  manner  of  Picking,  Baling, 
Marketing,  Opening,  and  Carding  Cotton  ;  to  which  is  added  a  list  of 
valuable  Tables,  Rules,  and  Receipts,  by  Foster  Wilson.     121110. 

Si. 50 

WILSON.— First  Principles  of  Political  Economy: 
With   Reference  to  Statesmanship  and   the   Progress  of  Civilization. 
By  Professor  W.  D.  Wilson,  of  the  Cornell  University.     A  new  and 
revised  edition.     i2mo.       .......  $1.50 

WOHLER.— A  Hand  book  of  Mineral  Analysis. 

By  F.  Wohler,  Professor  of  Chemistry  in  the  University  of  Gottin- 
gen.  Edited  by  Henry  B.  Nason,  Professor  of  Chemistry  in  the 
Renssalaer  Polytechnic  Institute,  Troy,  New  York.  Illustrated 
121110 $3. 00 

WORSSAM.— On  Mechanical  Saws: 

From  the  Transactions  of  the  Society  of  Engineers,  1869.  By  S.  W. 
Worssam,  Jr.    Illustrated  by  eighteen  large  plates.    8vo.  .         $2.50 


RECENT  ADDITIONS. 

ANDERSON— The  Prospector's  Hand-Book  : 

A  Guide  for  the  Prospector  and  Traveler  111  Search  of  Metal  Bearing 
or  other  Valuable  Minerals.  By  J.  W.  Anderson.  52  Illustrations. 
l2mo ■  ftj.ro 

BILGRAM.— Slide-Valve  Gears  : 

A  new,  graphical  method  for  Analyzing  the  Action  of  Slide- Valves, 
moved  by  Eccentrics,  Link  Motions,  and  Cut-off  Geais,  offering  easy 
means  for  properly  designing  Valves  and  Valve-Gears,  and  for  estab- 
lishing the  comparative  merits  of  their  various  constructions.  By 
Hugo  Bilgram,  M.  E.     Illustrated.     i6mo.      .         .         .         #1.00 

CREW. — A  Practical  Treatise  on  Petroleum  : 

Comprising  its  Geographical  Distribution,  its  Geology,  Chemistry, 
Mining,  Refining,  Preparation,  and  Uses.  Together  with  a  Descrip- 
uon  of  Gas  Wells  and  the  Application  of  Gas  as  Fuel,  etc.  By 
Benjamin  J.  Crew.     Illustrated.     8vo.     (In  preparation.) 

CROOKES.'— Select    Methods    in    Chemical   Analysis    (Chiefly 
Inorganic)  : 
l!y  William  Crookes,  F.  R.  S.,  V.  P.  C.  S.     2d  edition,  re-written 
and  greatly  enlarged.  Illustrated  by  37  wood-cuts.   725  pp.  Svo.  $9.50 


HENRY  CAREY  BAIRD  &  CO.'S  CATALOGUE.  31 

DAVIS. — A  Treatise  on  Steam-Boiler  Incrustation  and  Meth- 
ods for  Preventing  Corrosion  and  the  Formation  of  Scale : 
By  Charles  T.  Davis.     Illustrated  by  65  engravings.     8vo.     $2.00 

DAVIS. — A  Practical  Treatise  on  the  Manufacture  of  Paper: 
By  Charles  T.  Davis.     Illustrated.     8vo.      (In  preparation.) 

ROPER. — Instructions    and    Suggestions    for    Engineers    and 

Firemen 

Who  wish  to  Procure  a  License,  Certificate,  or  Permit  to  Take  Charge 

of  any  class  of  Steam   Engines  or  Boilers,  Stationary,  Locomotive, 

and  Marine.     By  Stephen  Roper,  Engineer    .         .         .        $2.00 

ROPER.— The  Steam  Boiler :  Its  Care  and  Management : 
^With  Instructions  for  Increasing  the  Efficiency  and  Economy,  and 
Insuring  the  Durability  and  Longevity  of  all  classes  of  Steam 
Boilers,  Stationary,  Locomotive,  Marine,  and  Portable.  With  Hints 
and  Suggestions,  and  Advice  to  Engineers,  Firemen,  and  Owners  of 
Steam  Boilers.  By  Stephen  Roper,  Engineer.  i2mo.,  tuck,  gilt 
edges  ...  $2.00 

ROPER.— The  Young  Engineer's  Own  Book  : 

Containing  an  Explanation  of  the  Principle  and  Theories  on  which 
the  Steam  Engine  as  a  Prime  Mover  is  Based.  By  Stephen  Roper, 
Engineer.  With  160  illustrations,  363  pages.  i8mo.,  tuck,  gilt 
edges #3.00 


ECONOMIC  PAPERS 


By   Henry  Carey   Baird 


"A  Floating  Debt."   18S5,    -       -       -       5cts. 

Argument  before  the  Committee  on 
Ways  and  Means,  March  9,  1876.  In 
opposition  to  the  issue  of  £500,000,000 
of  30  year  i)<2  gold  bonds.    8vo.,    -       20  cts. 

Brief  Tracts  on  Some  Economic  Ques- 
tions (1s.v.M.sn">  i.         ...        -        10  Cts. 

<  ommerce  or  Association ;  and  the 
Present  Relations  to  it  of  the  Unlim- 
ited Coinage  of  Silver.  An  address  be- 
fore the  Anti-Monopolv  League,  in 
New  York  City,  December  16,  1885,         5  cts. 

Copyright,  National  and  International 
(1872).  5  cts. 

i  opyright,  National  and  International. 
An  Address  before  the  Book-Trade 
Association  of  Philadelphia,  Febru- 
ary S.i,  1884, 5  cts. 

Criticisms  on  the  Recent  Financial 
Policies  of  the  United  States  and 
France  (1875).    8vo.,         -       -       -        10  cts. 

Germany.  The  Crime  of  Incompetent 
Governorship,  as  illustrated  by  the  re- 
cent Financial  and  Monetary  History 
of  Germany  (1875).    8vo.,        -       -    "  10  cts. 

Lessons  from  Abroad.  Observations 
that  point  Morals  (187(3).    8vo.,         -       5  cts. 

Letters  on  the  Crisis,  the  Currency  and 
the  Credit  System  (1873).    8vo.,       -        10  cts. 

Money.  Reprinted  from  the  American 
Cyclopaedia,  1875,      ....       75  cts. 

Money  and  Its  Substitutes.  Commerce 
and  Its  Instruments  of  Adjustment. 
Reprinted  from  the  Atlantie'Monthlv, 
March,  1876.    8vo.,  -       -       -       10  cts. 

Mr.  Blaine  and  the  Issue  of  the  Canvass. 
The  Address  of  the  Executive  Com- 
mittee of  the  Philadelphia  Indepen- 
dents Reviewed  (1884).       ...       5  cts. 

Mr.  David  A.  Wells  on  Over-Production 
and  Foreign  Trade.  An  Examination 
of  some  Remarks  of  Mr.  Wells,  at  the 
Free  Foreign-Trade  Dinner  in  New 
York  City,  March  15, 1884,         -       -       5  cts. 

Mr.  Hewitt  as  a  Philosopher  and  a 
Statesman.  His  Theory  of  Cheap  Raw 
Materials  as  a  Basis  for  National 
Wealth,  Power  and  Civilization,  Ex- 
amined and  Disputed  (1884).     -       -       Sets. 

Mr.  Sherman  and  the  National  Outlook 
(L878).  Sets. 

Our  Bank  Credit  System.  Its  Increasing 
Inflation  and  Decreasing  Strength 
(1880).   svo.,  -.--.       5  cts. 

Political  Keonomy.  Reprinted  from  the 
American  Cyclopaedia,  1875.  8vo., 
paper, 75  cts. 

Protection  of  Home  Labor  and  Home 
Productions  necessary  to  the  Prosperitv 
of  the  American  Farmer  (I860).  8vo.,  "10  cts. 

Quinine  (1880).    8vo.,    -  5  cts. 

Real  Cause  of  Business  Stagnation  in 
tie-  1  niied  States.  12mo.,  St.  John,  N. 
B.,  1878, 10  cts. 


Remonetization  of  Silver.  Testimony 
before  the  United  States  Monetary 
Commission  in  relation  to  the  Remone- 
tization of  Silver,  October  31,  ls7G. 
8vo.,     -------        10  cts. 

Resumption  of  Specie  Payments.    Tes- 
timony before  the  Committee  on  Tank' 
iug  and  Currency  in  relation  to  the 
Resumption    of    Specie     Payments, 
April  24,  1878.     Svo.,  -        -        -        10  cts. 

Sherman's  Silver  Theory.  Its  Sound- 
ness Disputed  (1877).      *     -       .        .       5  cts. 

Some  of  the  Fallacies  of  British  Free- 
Trade  Revenue  Reform.  Two  Letters 
to  Prof.  A.  L.  Perry,  of  Williams  Col- 
lege, Mass.  (1870).        .       -       -       .       5  cts. 

The  British  Credit  System.  Inflated 
Bank  Credit  as  a  Substitute  for  "Cur- 
rent Money  of  the  Realm"  (1875). 
8vo., 10  cts. 

The  "Clipped"  "Ninety-Cent  Dollar" 
Vindicated  (1880).      -  5  cts. 

The  Duty  on  Books.  Argument  before 
the  Finance  Committee,  United  States 
Senate.  May  23,  ls72,  -        -        -        5  cts. 

The  Eastern  and  the  Western  Questions. 
Turkey  and  the  United  States  :  How 
they  travel  a  Common  Road  to  Ruin. 
Addressed  by  way  of  warning  to 
President  Hayes  (is77 1.    8vo.,         -        lOcts. 

The  Evolution  of  the  True  Government 
(1879).    -------        5  cts. 

The  Greenback  :  Should  it  be  Deprived 
of  its  Legal-Tender  Power?    (1879).        5  cts. 

The  Lesson  of  German  and  French  Fi- 
nance. A  Reply  to  the  N.  Y.  Nation 
(1876).  Svo-,  ------       5cts. 

The  National  Finances  (1877).    Rvo.,  5cts. 

The  Necessary  Foundations  of  Individ- 
ual and  National  Well-Bcing  and  of 
Civilization.  A  Lecture  delivered  1  e- 
fore  the  Brooklyn  Revenue-Relorm 
Club  and  before"  the  Young  Repub- 
licans of  Philadelphia  (1883).  -       10  cts. 

The  President  on  a  "Standard  of 
Value"  (1885). 5  cts. 

The  Price  of  Silver  and  its  Relations  to 
the  Wheat  Competition  of  India 
(1885). Sets. 

The  Results  of  the  Resumption  of  Specie 
Payments  in  England,  1819-18:3:  A 
lesson  and  a  warning  to  the  ]  eople  of 
the  United   States  (1874).   svo.,        -       10  cts. 

The  Rights  of  American  Producers, 
and  the  Wrongs  of  Pritish  Free-Trade 
Revenue  Reform   (1s7l').      -        -        -        5  Cts. 

The  Silver  Dollar,  the  Original  Stand- 
ard of  Payment  of  the  United  States 
of  America  and  its  Enemies  (1883).       10  cts. 

The  United  States  Treasury  :  The  Ameri- 
can Car  of  Juggernaut  (1877).    SVO.,        5ctS. 

The  Way  to  Develop  Power  in  the  State 
(1880).    - 5  cts. 

What  is  Communism?    (1878).      -       -       Sets. 


Ki^Thr  above  or  any  of  our  books  sent  by  mail  free  of  postage  at  the  publication  prices  to  any 
address  in  tin  world. 

ilffr  Two  Oatalogm  »  of  Books  and  Pamphlets  on  Social  Science,  Political  Economy,  the  Currency, 
including  oil  of  ti„  pamphlets  of  II.  C.  Caret/  now  in  print:  as  well  as  our  large  Catalogue  of 
Practical  and  Scientific  Books,  96  pages,  Svo.,  and  our  other  catalogues  sent  free,  and  free  of 
postage  to  any  one  in  any  part  of  the  world  ivho  uill  furnish  his  address. 

HENRY  CAREY  BAIRD  &  CO., 

Industrial  Publishers,  Booksellers  and  Importers, 

810  Walnut  Street,  Philadelphia. 


VERSITY  OF  OALlfOWn*   LIBRARY 


■vS>%<$  S\ 


j™V*RSITV  OF  CAUPORNU 


~f~ 'J^ 

N-n.i/1^  (. 

>KNIA 

LIBRARY 

1 

pal 

^  ^i      =  — 

SH 

; ^-=gpT 

^jggl 

P  fPfjMj 

HP 

g-^7^S^^ 

jgjjj^ggp^iyjgr^ 

tea 

^T'j^^ 

^Kpijpif 

^S@ 

i 

*\ ■  M 

v  'Inn '  K  'if 

>*%v 

1 

i  SHniiori 
■  )  )  >  V- 

vSt 

$$$$$1 

Hi 

'rl'nV 

iwuiriS 

.nfmnKpl 

I    ^    )    }    ►•  > 

• ' » * » S  * » '  i 

11    1 

4  'ifi  'ill  'I  !■  if 

Hi 

■ 

■    :'- 


•  '    ■ 


mm  : 


...       ■  . . 


II 

:       ,::■■:■;,.    . 

